D.R. Horton Inc., the largest U.S. homebuilder by volume, rose to a six-year high after reporting that fiscal second-quarter profit more than doubled as climbing demand and prices fuel a housing-construction recovery.
Net income was $111 million, or 32 cents a share, for the three months ended March 31, up from $40.6 million, or 13 cents, a year earlier, the Fort Worth, Texas-based company said in a statement today. The average estimate of 18 analysts was 19 cents a share, according to data compiled by Bloomberg.
“The first half of fiscal year 2013 was nothing short of phenomenal, and we expect the second half to be even better,” Chief Executive Officer Donald J. Tomnitz said on a conference call today.
Low mortgage rates and a shrinking inventory of existing houses on the market are spurring increases in construction. New single-family homes sold at an annual pace of 417,000 last month, capping the busiest quarter since 2008, the Commerce Department said this week. PulteGroup Inc. and Ryland Group Inc. this week reported earnings that beat analysts’ estimates as sales and prices climbed.
“The game is now about growing profitability, not orders,” Stephen East, an analyst with International Strategy & Investment Group LLC in St. Charles, Missouri, who has a buy rating on D.R. Horton, said in a note to investors today. “We believe this equity will see continued strength and interest over the coming months.”
D.R. Horton rose 8.7 percent to $26.66 at the close in New York. It was the highest price for the stock since February 2007. The shares have climbed 35 percent this year, compared with an 18 percent gain for the 11-member Standard & Poor’s Supercomposite Homebuilding Index.
Under Tomnitz, D.R. Horton has used its size advantage to reduce costs and increase market share by accelerating land purchases ahead of competitors.
The company spent $460 million on land during the quarter. Average prices rose 14 percent, partly because the houses D.R. Horton is selling have increased in size, Tomnitz said.
D.R. Horton’s homebuilding revenue rose to $1.39 billion from $935.6 million a year earlier. It sold 5,643 homes, up from 4,240, and orders jumped to 7,879 homes from 5,899.
The company is on track to surpass PulteGroup this year to become the largest builder by all measures -- revenue, volume and income -- Tomnitz said. PulteGroup had revenue of $1.17 billion and orders for 5,200 homes in the quarter ended March 31, the Bloomfield Hills, Michigan-based builder said yesterday.