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Celebrations may be in order for D.R. Horton, Inc. (NYSE:DHI) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance.
After this upgrade, D.R. Horton's 13 analysts are now forecasting revenues of US$22b in 2021. This would be a notable 17% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 16% to US$6.48. Previously, the analysts had been modelling revenues of US$20b and earnings per share (EPS) of US$5.24 in 2021. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
See our latest analysis for D.R. Horton
With these upgrades, we're not surprised to see that the analysts have lifted their price target 12% to US$73.70 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values D.R. Horton at US$89.00 per share, while the most bearish prices it at US$58.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the D.R. Horton's past performance and to peers in the same industry. It's clear from the latest estimates that D.R. Horton's rate of growth is expected to accelerate meaningfully, with the forecast 17% revenue growth noticeably faster than its historical growth of 12% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.8% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that D.R. Horton is expected to grow much faster than its industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at D.R. Horton.