Ticonderoga Reiterates a 'Buy' on D.R. Horton (DHI); Estimate Update: DHI Continues Debt Repurchase
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Price: $148.81 -0.71%
Rating Summary:
13 Buy, 23 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
13 Buy, 23 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Ticonderoga reiterates a 'Buy' on D.R. Horton (NYSE: DHI), PT $14.50.
Ticonderoga analyst says, "DR Horton announced plans to repurchase the remaining $112.3M of its 5.375% Senior Notes due June 15, 2012. We applaud DHI’s continued commitment to debt reduction. At risk of sounding like a broken record, we have long been advocates that debt levels on builders’ balance sheets have climbed much too high, and interest expense as a percentage of sales must be right-sized given the current environment. We hope other builders take note. We believe debt reduction is a better use of builders’ capital at this point in the cycle and favor this over equity repurchases or dividend growth. This action, along with DHI’s desire to quickly turn new communities back to cash within 12 months and spec inventory reduction strategy, will allow the company to further reduce its balance sheet."
"We are moving up our EPS estimate from $0.29 to $0.30 and $0.91 to $0.92 for fiscal 2011 and 2012, respectively. We note that we anticipate a one-time extraordinary loss from debt redemption of approximately $6.3M, or $0.02 per share, in 3Q11 that is excluded from our 2011 EPS calculation. The debt repurchase will reduce DHI’s interest expense as a percentage of sales by 10 bps in 2011 and 2012. The company’s direct interest expense is not expected to disappear from the income statement in fiscal 2011 or 2012, however, current efforts put the company one step closer to achieving this goal. DHI has effectively reduced its Net Debt to Total Capital ratio from 32.1% in 2009 to the current 15.2% level."
For more ratings news on D.R. Horton click here and for the rating history of D.R. Horton click here.
Shares of D.R. Horton closed at $11.70 yesterday.
Ticonderoga analyst says, "DR Horton announced plans to repurchase the remaining $112.3M of its 5.375% Senior Notes due June 15, 2012. We applaud DHI’s continued commitment to debt reduction. At risk of sounding like a broken record, we have long been advocates that debt levels on builders’ balance sheets have climbed much too high, and interest expense as a percentage of sales must be right-sized given the current environment. We hope other builders take note. We believe debt reduction is a better use of builders’ capital at this point in the cycle and favor this over equity repurchases or dividend growth. This action, along with DHI’s desire to quickly turn new communities back to cash within 12 months and spec inventory reduction strategy, will allow the company to further reduce its balance sheet."
"We are moving up our EPS estimate from $0.29 to $0.30 and $0.91 to $0.92 for fiscal 2011 and 2012, respectively. We note that we anticipate a one-time extraordinary loss from debt redemption of approximately $6.3M, or $0.02 per share, in 3Q11 that is excluded from our 2011 EPS calculation. The debt repurchase will reduce DHI’s interest expense as a percentage of sales by 10 bps in 2011 and 2012. The company’s direct interest expense is not expected to disappear from the income statement in fiscal 2011 or 2012, however, current efforts put the company one step closer to achieving this goal. DHI has effectively reduced its Net Debt to Total Capital ratio from 32.1% in 2009 to the current 15.2% level."
For more ratings news on D.R. Horton click here and for the rating history of D.R. Horton click here.
Shares of D.R. Horton closed at $11.70 yesterday.
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