April 23 (Bloomberg) -- D.R. Horton Inc., the largest U.S. homebuilder by volume, beat analysts’ earnings estimates as it increased sales in the second quarter.
Net income was $40.6 million, or 13 cents a share, for the three months through March 31, up from $27.8 million, or 9 cents, a year earlier, the Fort Worth, Texas-based company said today in a statement. Analysts expected earnings of 3 cents a share, the average of 17 estimates in a Bloomberg survey.
The company had a profit for a fifth straight quarter as sales increased in each of its regions. U.S. new-home sales probably rose in March to an annual pace of 318,000, the median estimate of 64 economists surveyed by Bloomberg. That would be up 1.6 percent from February and 4.3 percent from a year earlier. The Commerce Department will report the data tomorrow.
“At this point, we see no other builder executing better,” Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, wrote in a note to investors today. “We are not at a point in the housing cycle where all boats are lifted -- or left stranded on dry land -- consequently, the ability to grow the business while earning money and not burning cash deserves a premium valuation.”
East, who rates the company a buy, projected earnings of 3 cents a share.
Revenue, Orders Increase
D.R. Horton’s homebuilding revenue for the quarter was $935.6 million, up from $733.1 million a year earlier.
Orders rose 19 percent from a year earlier to 5,899 homes, and the company’s backlog of properties under contract increased 17 percent to 6,189. The number of completed home sales jumped 21 percent to 4,240.
A “strong” sales pace has continued through the first half of April, Chairman Donald R. Horton said in the statement. The company predicted stronger closings and profitability in the second half of the fiscal year, as consumers traditionally buy more new homes during warmer months.
The company, which spent $319 million on new lots and development during the quarter, continues “to aggregate market share across the country” as it broadens sales beyond first-time homebuyers and as competing builders lack the capital to keep up, Chief Executive Officer Donald Tomnitz said on a conference call today.
“I see an opportunity for us to continue to take market share,” he said. “Not only away from those small and medium-sized, undercapitalized private builders, but I also believe and know that the very first time in our company’s history, that we have an excellent opportunity to continue to take market share away from our public competitors who I perceive are way overleveraged.”
Builders broke ground on new houses at an annual pace of 462,000 last month, down from 463,000 in February and up from 418,000 in March 2011, the Commerce Department said last week.
D.R. Horton dropped 2.1 percent to $15.06 at the close in New York, compared with a 2.3 percent decline for the 11-member Standard & Poor’s 1500 Homebuilding index. Markets fell worldwide in response to European political and economic concerns.
NVR Inc., the fourth-largest U.S. homebuilder by revenue, said April 19 that its orders rose 31 percent and its backlog increased 33 percent.
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