Hey, down 60% or more already from their peak, and here come the write-downs (their land and building holdings are overinflated on their books), the wholesale layoffs, the lawsuits, the insider trading charges, the trials and jail time, the mergers and acquisitions (firesales) and the utter and total collapse of an industry.
D.R. Horton Inc. cuts its full-year earnings forecast by almost a third late Thursday as the leading homebuilder suffered from tough conditions in the residential real estate market. Shares of the company dropped 9% during after-hours trading.
Donald Horton, chairman, noted the "difficult selling conditions the homebuilding industry is experiencing."
"The current home sales environment is characterized by an increase in both existing and new homes available for sale, higher than normal cancellation rates and an increase in the use of sales incentives in many of our markets," he added.
July 14, 2006
Homebuilder stocks are now the new pets.com - D.R. Horton latest to flame out
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where's "the banker"?
Please put up a chart of AAPL. You are long, and the chart looks even worse. Then we can discuss "if anyone sees a trend here", and why anyone in their right mind (as you say) would be long AAPL right now.
Can someone please explain to me the real reason K. Hovnanian would need to borrow $250,000,000.00 if everything is "just great" in the housing market? How can people buy from this company? I quess that they do build the finest of the corporate crap houses on the market. Now, people should be aware that this company might go belly up along with their down payment.
They are taking the plays right out of Bernard Schwartz's play book for Loral (now BK). The game is:
1. Borrow to the hilt (who holds the bonds, or who buys the bonds at reduced prices?)
2. Take lots of money out of the company. Lots and lots...
3. Get the board to give the CEO "personal immunity" and pay his insurance for fraud.
Tell the stockholders that you are focused on their "shareholder value".
4. Take the company BK and wipe out the common stock.
5. Bondholders own the company. CEO walks away rich, scott free.
news Alert !!!!
Roof Collapses at Horton
By Nicholas Yulico
TheStreet.com Staff Reporter
7/14/2006 9:57 AM EDT
Click here for more stories by Nicholas Yulico
D.R. Horton (DHI - commentary - Cramer's Take) fell more than 9% Friday after it reported a drop in third-quarter new-home orders and slashed its full-year earnings forecast.
The largest U.S. homebuilder said that its orders for the quarter ended June 30 fell 4.4% to 14,316 homes from 14,980 a year earlier. The value of the homes sold dropped to $3.8 billion from $4.1 billion.
The company expects to post third-quarter earnings of 93 cents a share, well below analysts' average estimate of $1.30, as compiled by Thomson First Call. The company's forecast includes about 11 cents a share in write-offs related to land option contracts.
"The current home sales environment is characterized by an increase in both existing and new homes available for sale, higher than normal cancellation rates and an increase in the use of sales incentives in many of our markets," said Chairman Donald R. Horton in a statement.
For the full fiscal year, D.R. Horton sees earnings of at least $3.65 a share, compared with its earlier forecast of $5.25 to $5.35. Analysts target full-year earnings of $4.92 a share.
"We think the sharp deterioration in earnings throughout the end of fiscal 2006 likely reflects sharply lower closings and significantly lower margins," Bank of America analyst Daniel Oppenheim wrote in a research note.
He estimates the company's gross margins will fall to 16.2% in the fourth quarter of this year, down from 25.2% in the fourth quarter of 2005.
Oppenheim cut his 2006 EPS target on Horton to $3.65, down from $4.85, and slashed his 2007 target to $1.85, from $2.55, due to faster-than-expected margin declines.
Horton's sentiment echoes warnings from across the industry as builders ratchet down their fiscal 2006 estimates. Several major homebuilders, including Toll Brothers (TOL - commentary - Cramer's Take), KB Home (KBH - commentary - Cramer's Take) and Pulte (PHM - commentary - Cramer's Take), have cut their fiscal-year guidance in the past two months.
Shares of Horton fell 9.1% to $20.77 early Friday.
In other builder news Friday, Raymond James released a report that said contracts for housing sales fell 42% year-over-year in June in the greater Washington area, according to an area realtors groups. Closings declined 38% and the inventory on the market now represents 7.1 months of supply, compared with 1.6 months in June 2005, and 5.9 months in May.
"We continue to believe the Washington, D.C., market is headed lower as excessive speculation and overbuilding will weigh on the market for the foreseeable future," Raymond James analyst Rick Murray wrote.
Public homebuilders that have a major presence in the market include NVR (NVR - commentary - Cramer's Take), Toll Brothers and Hovnanian (HOV - commentary - Cramer's Take).
where's "the banker"?
The Banker may have jumped. But I'm still hopeful
OK, so which builders have the greatest exposure to Miami, Boston, DC, Northern VA, Phoenix, San Diego, Sacto, Las Vegas, and West Florida?
WCI Communities (WCI)
the poster child for a home builder heading for a cement wall at 90 miles per hour with no brakes
high rise condos in FL..$1 million and up
sales down 84%; company using precious cash to buy back its stock
earnings report out in early August
16 now, under 10 soon?
hint...put options, including LEAPS available for purchase
do your own research before investing your hard earned money
I'll look at WCI. OTM Jan 07 CTX puts have been my best investment of 2006.
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Their Jacksonville Florida office has just laid off 43 full time employees effective today.
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