Shares of Fort Worth-based D.R. Horton surged the most in more than a year on Tuesday after the largest U.S. home builder reported fiscal first-quarter earnings that beat analysts’ estimates.
Net income for the three months through December was $206.9 million, or 55 cents a share, compared with $157.7 million, or 42 cents, a year earlier, the company said. The average estimate of 12 analysts was 47 cents a share, according to data compiled by Bloomberg.
On Wall Street, Horton shares (ticker: DHI) jumped more than 6 percent, gaining $1.90 to close at $30.64 a share.
Home construction has risen in the U.S., and an increase in mortgage rates encouraged buyers to sign contracts quickly. New home sales jumped 5.2 percent to a four-month high in November, according to Commerce Department data.
“We view [D.R. Horton’s] consistency as a rare commodity in the homebuilding space,” Jay McCanless, an analyst with Wedbush Securities, wrote in a note to investors. “As a result of that consistency and DHI’s focus on the entry-level/first-time consumer, we believe investors should be willing to pay an above-average multiple.”
D.R. Horton said orders increased 15 percent from a year earlier to 9,241 homes. Megan McGrath, an analyst at MKM Holdings in Stamford, Conn., said she was expecting a 7 percent increase, and McCanless said he projected a 12 percent jump.
“In our view, this was a very solid quarter, with better orders than expected,” McGrath said. “We expect DHI will outperform off of these results today.”
Home-building revenue rose to $2.8 billion in the first quarter, from $2.4 billion a year earlier, D.R. Horton said. The company’s gross margin on home sales was 19.8 percent, compared with 19.9 percent a year earlier. The number of sales completed in the quarter climbed 17 percent to 9,404.
The company plans to move its corporate headquarters to Arlington this spring, where it is finishing construction on a new 200,000-square-foot complex along Interstate 30.
This article includes material from the Star-Telegram archives.