Coming into Thursday, D.R. Horton shares were up about 33% year to date.
Daniel Acker/Bloomberg
Housing giant D.R. Horton reported better than expected fiscal third-quarter numbers Thursday morning. While the results and company outlook were positive, investors reacted with caution.
Horton (ticker: DHI) earned $3.06 a share from $7.3 billion in sales. Wall Street was looking for $2.80 in per-share earnings from $7.2 billion in sales. It’s the company’s 10th consecutive quarterly earnings beat.
“The D.R. Horton team delivered outstanding results in the third fiscal quarter of 2021, highlighted by EPS increasing 78%,” said Donald Horton, chairman of the board. “These results reflect our experienced teams and production capabilities, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.”
Shares, however, were down about 3.8% in Thursday’s premarket trading.
Coming into Thursday, Horton shares were up about 33% year to date, better than the comparable 16% and 14% respective gains of the S&P 500 and Dow Jones Industrial Average.
The company’s strong first-half results have been driven by an improving economy. Housing starts in June, for instance, rose about 6% compared with May and almost 30% year over year. The June starts figure also exceeded economist projections.
The company sounds upbeat about coming months too. “Housing market conditions remain very robust, with home buyer demand exceeding our current capacity to deliver homes across all of our markets,” the chairman said. “As our top priority is to consistently fulfill our commitments to our homebuyers, we have slowed our home sales pace to more closely align to our current production levels, while building out the infrastructure needed to support a higher level of home starts.”
Horton’s current inventory of homes is about 47,000, up 55% from a year ago.
With that inventory, the company now expects to generate about $27.9 billion in sales for its full fiscal year, an increase of about $700 million from guidance given in April. With one quarter left in the company’s fiscal year, the guidance implies more than $8 billion in fourth-quarter sales, better than the Street’s current projection of $7.7 billion.
The Thursday morning stock weakness can probably be best described as bull market action. When things are good investors’ playbooks usually tell them to “sell the news and buy the dips.”
Write to Al Root at [email protected]
