“America’s Builder”: A House of Cards
We just checked in with Wayne Nef to get the goods on the homebuilders...here is his latest take:
D.R. Horton has reported a third-quarter loss of $1.76 a share, well below the consensus estimate of a loss of $0.35.
The company had numerous charges. The first is a $425.6 million goodwill impairment charge, the second charge was a $12.1 million charge for the early retirement of debt.
Additional charges include a $835.8 million charge for a writedown of inventory and a $16.2 million charge for a writeoff of deposits and option contracts that the company does not intend to pursue. These are a cost of doing business.
After peeling away the noise from the charges, results were still horrible. Homebuilding revenues declined 30.6% year over year, while the number of homes closed during the period dropped 27.9%.
Meanwhile the number of homes under contract dropped 36.7% year over year, and the dollar value of the home under contract dropped 40.5%. This implies that not only did the company contract for fewer homes, they also contracted for lower prices.
Net sales orders for the quarter declined by 40.2% on a number of homes basis, while declining 47.4% on a dollar basis. All said not a great showing by “America’s builder”.
Wayne just started a free weekly newsletter that you can sign up for at:
http://www.nefvalueresearch.com
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position in securities mentioned By Nef Value Research of 1440 Wall Street
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