D.R. Horton Shares Drop After Reporting Loss Wider Than Analysts Expected

D.R. Horton Inc., the second-largest U.S. homebuilder by stock-market value, fell in New York trading after reporting a fiscal first-quarter loss that was wider than analysts expected.

The net loss of $20.4 million, or 6 cents a share, for the quarter ended Dec. 31 compares with a profit of $192 million, or 56 cents, a year earlier, the Fort Worth, Texas-based builder said today in a statement. It was expected to have a 3-cent loss, the average estimate in a Bloomberg survey of 16 analysts.

The shares fell 43 cents, or 3.3 percent, to $12.81 as of 4:15 p.m. in New York Stock Exchange composite trading.

Homebuilders have been hurt by the expiration of tax credits worth as much as $8,000 for first-time buyers. Contracts had to be signed by April 30 and transactions completed by the end of September to qualify. Builders also are struggling with competition from foreclosures and decreased demand as unemployment hovers above 9 percent.

“They sold fewer houses than forecast,” Jack Micenko, an analyst with Susquehanna International Group LLP in New York with a “positive” rating on the stock, said in an e-mail today. “It’s not a buyer affordability issue; it’s a low traffic issue.”

Revenue from homebuilding dropped to $767 million from $1.1 billion a year earlier as the number of homes sold fell 34 percent to 3,637, D.R. Horton said.

Nationwide Slump

U.S. new-home sales declined to 321,000 last year, the lowest level in data going back to 1963, the Commerce Department reported yesterday.

“I think 2011 will be a marginal weak year in the homebuilding industry,” D.R. Horton Chief Executive Officer Donald Tomnitz said during a conference call today. “Our goal is still to be profitable in 2011 and we’re going to struggle more in ‘11 than we did in ‘10 to be profitable.’’

NVR Inc., the Reston, Virginia-based company that builds Ryan Homes, said today that fourth-quarter net income fell to $58.7 million from $60.6 million a year earlier. Home orders dropped to 1,765 from 2,000. Shares of NVR, the largest U.S. homebuilder by market value, rose 1.1 percent to $793.13.

Weak demand may make it harder for builders to maintain profits and force them to write down more properties on their books, Michael Widner, an analyst with Stifel Nicolaus & Co. in Baltimore, wrote in a note to investors today.

‘Take the Pain’

‘‘We suspect the trade-off across the group over the next few quarters will be taking higher impairments to maintain strong gross margins or keeping impairments down but letting margins slip,’’ Widner wrote. ‘‘Take the pain in one lump or spread it out.’’

D.R. Horton’s home orders fell to 3,363 from 4,037.

‘‘We see the first three quarters of this year as weaker than last year,’’ Stephen East and Paul Przybylski, analysts at Ticonderoga Securities LLC, wrote in a Jan. 25 note. ‘‘Community growth will continue, though, setting up the second half of the year for better trends.’’

D.R. Horton Chairman Donald R. Horton also said he expects sales to improve later this year.

‘‘While our year-over-year comparisons for net sales orders are very difficult for the next two quarters, we do expect to see an increase from the sales levels we achieved in the December quarter,’’ he said in today’s statement.

D.R. Horton’s results from a year earlier included a $149.2 million refund of corporate income taxes paid before it began reporting losses in 2007.

The company’s shares have advanced 9.8 percent in the past year, outpacing a 7.1 percent gain in the 12-member Standard & Poor’s Supercomposite Homebuilding index.

To contact the reporter on this story: John Gittelsohn in New York at johngitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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