As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the home builders industry, including D.R. Horton (NYSE: DHI) and its peers.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 12 home builders stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.
Thankfully, share prices of the companies have been resilient as they are up 8.9% on average since the latest earnings results.
D.R. Horton (NYSE: DHI)
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.
D.R. Horton reported revenues of $9.23 billion, down 7.4% year on year. This print exceeded analysts’ expectations by 5%. Overall, it was a strong quarter for the company with a solid beat of analysts’ adjusted operating income estimates and a beat of analysts’ EPS estimates.
David Auld, Executive Chairman, said, “The D.R. Horton team delivered a strong third quarter, highlighted by earnings per diluted share of $3.36. Consolidated pre-tax income for the quarter was $1.4 billion on revenues of $9.2 billion, with a pre-tax profit margin of 14.7%. We leveraged our operational results and strong balance sheet to return $1.3 billion to shareholders through share repurchases and dividends during the quarter, and we have reduced our outstanding share count by 9% from a year ago.
D.R. Horton scored the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 23.9% since reporting and currently trades at $162.56.
Is now the time to buy D.R. Horton? Access our full analysis of the earnings results here, it’s free.
Best Q2: Champion Homes (NYSE: SKY)
Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.
Champion Homes reported revenues of $701.3 million, up 11.7% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a solid beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.
Champion Homes delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 8% since reporting. It currently trades at $71.47.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Lennar (NYSE: LEN)
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Lennar reported revenues of $8.38 billion, down 4.4% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a softer quarter as it posted a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 18.2% since the results and currently trades at $129.29.
Read our full analysis of Lennar’s results here.
Taylor Morrison Home (NYSE: TMHC)
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $2.03 billion, up 2% year on year. This result topped analysts’ expectations by 3.9%. Taking a step back, it was a satisfactory quarter as it also logged a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.
The stock is down 1.5% since reporting and currently trades at $65.82.
Read our full, actionable report on Taylor Morrison Home here, it’s free.
Tri Pointe Homes (NYSE: TPH)
Established in 2009 in California, Tri Pointe Homes (NYSE: TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Tri Pointe Homes reported revenues of $902.4 million, down 21.9% year on year. This number beat analysts’ expectations by 10%. Zooming out, it was a mixed quarter as it also recorded a beat of analysts’ EPS estimates but a significant miss of analysts’ backlog estimates.
Tri Pointe Homes achieved the biggest analyst estimates beat but had the slowest revenue growth among its peers. The stock is down 2.6% since reporting and currently trades at $34.27.
Read our full, actionable report on Tri Pointe Homes here, it’s free.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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