D.R. Horton (DHI) Soars to a Six-year High
Shares of D.R. Horton (DHI), the largest U.S homebuilder by volume, soared to a six-year high last week after the company reported second quarter profit that handily topped analyst expectations. For its second quarter, the Fort Worth, Texas-based company earned $0.32 per share, or $111 million, up from the $0.13, or $40.6 million, it reported in the prior year quarter. Analysts had expected the company to earn $0.19 per share.
Meanwhile, D.R. Horton's homebuilding revenue, which does not include its financing arm, rose to $1.39 billion, up from $935.6 million in the previous year. Daily Chart
The company sold 5,643 homes, up from 4,240 in the prior year quarter, while order for new homes rose to 7,879, up from 5,899. The company attributed its strong sales to an improving housing market, fueled by stronger employment options, and buffered by low fuel costs. Low mortgage rates and a declining inventory of existing homes are contributing to the rising rate of construction across the country. CEO Donald J. Tomnitz stated, "The first half of fiscal year 2013 was nothing short of phenomenal, and we expect the second half to be even better." Tomnitz's optimistic view is backed by recent data from the U.S. Commerce Department, which stated that new single family homes sold at an annual pace of 417,000 in March, concluding the housing industry's busiest quarter since 2008. Those bright macro figures also contributed to stronger than expected results from D.R. Horton's rivals, PulteGroup (PHM
) and Ryland Group (RYL
). However, D.R. Horton is a standout industry performer, gaining 35% since the beginning of this year, compared to an 18% gain in its S&P Supercomposite Homebuilding Index. Looking forward, D.R. Horton is expected to now focus on growing profitability and not total orders, considering the current size of its order backlog. The key to this will be lower costs, which the company is attempting to achieve by buying up land ahead of its industry rivals. During the quarter, D.R. Horton spent $460 million on new land purchases during the quarter, when average land prices rose 14%. Analysts believe that D.R. Horton is on track to surpass its closest competitor, PulteGroup, in all financial aspects - profits, revenue and sales volume. If market conditions remain stable and in their upward trend, the company expects to continue raising prices to address rising demand in the United States. The company finished the quarter with 15,800 completed homes and 175,000 finished land lots in its inventory. Shares of D.R. Horton trade at 17.2 times forward earnings with a 5-year PEG ratio of 3.1. It pays a quarterly dividend of $0.15 - a 0.7% yield at current prices. Other News About DHI D.R. Horton Reaches a Six-Year High After Earnings Double
D.R. Horton soars past its peers to hit a six-year high. Sales, Profits Surge at D.R. Horton as Homebuilder Has "Phenomenal" Quarter
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Published on Apr 29, 2013
By Leo Sun