One of the largest homebuilders in the U.S.,
D.R. Horton, Inc
) beats both the Zacks Consensus Estimates in the first quarter
of fiscal 2013.
The company reported net earnings of 20 cents per share in the
first quarter of fiscal 2013 versus 9 cents in the year-ago
quarter. Earnings per share beat the Zacks Consensus Estimate of
14 cents by 50%. The 133.3% year-over-year earnings upsurge was
driven by an increase in homebuilding revenues.
Homebuilding revenues climbed 39.0% year over year to $1.23
billion, driven by price increases and double digit growth in net
sales orders, homes closed and sales order backlog. Reported
revenues beat the Zacks Consensus Estimate of $1.10 billion.
Quarter in Detail
Most of the company's revenue originates from the sale of
completed homes and a small portion of revenue comes from the
sale of land and lots.
The company reported home sales of $1.22 billion in the first
quarter of fiscal 2013, up 33.3% y/y driven by strong growth in
net sales orders. Home sales revenue increased in all the
Net sales orders of the company were 5,259 homes in first quarter
of fiscal 2013, up 39% y/y, driven by an increase in demand for
homes in most of the regions. The value of net sales order grew
60% to $1.3 billion in the quarter.
The company closed 5,182 homes in first quarter of fiscal 2013,
up 26% y/y. Prices increased in the quarter on the back of
favorable geographic mix and larger homes.
The quarter-end sales order backlog rose 62% to 7,317 homes as of
Dec 31, 2012 from 4,530 homes as of Dec 31, 2011. The value of
backlog rose 80% to $1.8 billion as of Dec 31, 2012 from $1.0
billion as of Dec 31, 2011.
Land sales contributed $9.9 million to revenues compared with a
meager $1.3 million in the prior year period. The company is
increasing its investment in land and lots in response to the
rising housing demand.
D.R. Horton's Financial Services segment generates revenue from
originating and selling mortgages and payments for title
insurance agency and closing services. In first quarter 2013,
Financial Services revenue was $41.9 million, up from $21 million
in the prior-year quarter.
However, the company does not add the revenue from this segment
to its total sales. Instead, the operating income generated by
the segment is clubbed with the operating income from the
homebuilding segment to derive the consolidated operating income
of the company.
Gross profit on home sales was $230.5 million versus $148.7
million in the prior-year quarter. Homebuilding selling, general
and administrative (SG&A) expenses increased 18.3% to $140.8
million in the quarter.
The company witnessed highest pre-tax income since 2007 to $107.9
million in the first quarter of fiscal 2013, up 270% year over
The company is optimistic about the upcoming quarters in fiscal
2013. The company is well positioned with its homes under
constructions, investments in land & finished lots, strong
balance sheet and liquidity.
We appreciate the company's strong results in the first quarter
of fiscal 2013. The rising demand for new homes has led to a
favorable situation in the housing market, where inventory levels
are dropping and prices are moving up. D.R. Horton has been
witnessing significant growth in both volumes and selling
Moreover, new home orders, backlogs and homes delivered have
all increased in double digit percentages in fiscal 2012 and now
in the first quarter of fiscal 2013. D.R. Horton's homes in
inventory have also been increasing. Moreover, the company is
leveraging fixed costs while also increasing production due to
D R HORTON INC (DHI): Free Stock Analysis
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D.R. Horton carries a Zacks Rank #5 (Strong Sell). However, given
the solid results in the current quarter, we cannot rule out an
upgrade in the near future.
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post
an earnings beat this quarter:
Meritage Homes Corporation
), Earnings ESP of +4.76% and a Zacks Rank #1 (Strong Buy).
MDC Holdings Inc.
), Earnings ESP of +11.63% and a Zacks Rank #1 (Strong Buy).
Ryland Group Inc.
), Earnings ESP of +6.00% and a Zacks Rank #2 (Buy).