On Apr 2, Zacks Investment Research upgraded national
D.R. Horton Inc.
) to a Zacks Rank #1 (Strong Buy), following solid fundamentals
of the overall housing market.
Why the Upgrade?
D.R. Horton has been witnessing rising earnings estimates
ahead of its fiscal second-quarter results later this month. We
believe that the estimates are rising on the back of solid
momentum in the housing market and a bright outlook for the
to-be-reported quarter due to the spring selling season.
D.R. Horton is witnessing significant growth in both volumes
and selling prices driven by substantial improvement in demand
across all markets. The stability in the home buying market,
combined with low interest rates and increased rentals have
increased the affordability of homes. Moderate job growth and
slowly increasing consumer confidence are also contributing to a
rise in demand for new homes. Inventory of foreclosed homes and
short sale homes is declining, thus stabilizing the prices of new
homes. Thus, homebuilders are witnessing an increased traffic
level due to heightened consumer demand. Home prices have started
moving up lately with market demand gaining momentum. Moreover,
new home orders, backlogs and homes have been increasing in
double-digit percentages. In fact, this homebuilder has beaten
the Zacks Consensus Estimates for earnings over the past four
The pace of the company's investments in homes under
construction, land development and finished lots has also
increased following the improved liquidity position from solid
sales growth in 2012. The company had 14,200 homes and 60,000
finished land lots in inventory at the end of the first quarter
of 2013, which positions it well to capture the increased demand
during the spring selling season in the second quarter.
If market conditions remain stable, management expects the
company's profitability to increase in 2013 and thereafter. This
is expected to be driven by its solid balance sheet and improved
liquidity position allowing it to re-invest in growth
opportunities; increased pricing power; rising homes inventory
and improving land position.
Other Stocks to Consider
Many housing companies have favorable Zacks Ranks due to the
solid fundamentals of the overall homebuilding market. Some worth
Ryland Group Inc.
) - Zacks Rank #1 (Strong Buy),
) -Zacks Rank #2 (Buy) and
Consorcio ARA, S. A. B. de C. V.
) - Zacks Rank #2 (Buy).
CONSORCIO ARA (CNRFF): Get Free Report
D R HORTON INC (DHI): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
RYLAND GRP INC (RYL): Free Stock Analysis
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