D.R. Horton Earnings Rise as Sales and Order Volume Increase

D.R. Horton: Spring Selling Off to Strong Start

D.R. Horton Inc., the largest U.S. homebuilder by revenue, said fiscal second-quarter earnings rose as sales increased in a sign of growing demand for new homes.

Net income climbed to $147.9 million, or 40 cents a share, for the three months ended March 31 from $131 million, or 38 cents, a year earlier, the Fort Worth, Texas-based company said Wednesday in a statement. The average of 15 analyst estimates was 38 cents a share, according to data compiled by Bloomberg.

“The spring selling season at D.R. Horton is off to a strong start,” Chairman Donald R. Horton said in the statement. “Our increasingly diverse product offerings are enabling us to expand our industry-leading market share.”

Low mortgage rates, an improving job market and a tight inventory of existing homes for sale are driving more buyers to newly built residences. New-home sales probably rose to an annual pace of 515,000 in March, up 28 percent from a year earlier, according to the median of 79 estimates compiled by Bloomberg. The Commerce Department reports new-home sales for the month tomorrow.

D.R. Horton, which sells in 27 states, has been building more speculative homes than other builders have, wagering that demand would increase. The company offers a range of models, with its low-cost Express Homes brand helping boost volume and its more expensive Emerald Homes providing larger profit margins.

D.R. Horton’s orders increased to 11,135 homes with a value of $3.2 billion in the fiscal second quarter, compared with 8,569 houses valued at $2.4 billion a year earlier. Homebuilding revenue rose to $2.34 billion from $1.7 billion.

The gross margin on sales shrank to 19.7 percent, about 250 basis points down from a year earlier and “consistent with the company’s strategy of prioritizing pace over pricing,” Megan McGrath, an analyst with MKM Holdings LLC, said in a note today. Prices increased 3.7 percent on sales and 2 percent on orders during the quarter, McGrath, who rates Horton the equivalent of hold, said in the note.

The results were announced before the start of regular U.S. trading. The shares rose 1.9 percent to $28.56 yesterday. They are up 13 percent this year, compared with an 8.7 percent gain for the 22-member Bloomberg homebuilder index.

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