Shares of D. R. Horton Inc. (NYSE: DHI) rallied on Friday after the America’s largest homebuilder by annual closings said that net income in the fiscal second quarter climbed more than three times thanks to robust home sales aided by solid recovery in the housing market and expects demand will remain strong in coming quarters.
The Company is known for its risk-averse business strategy and focus on low-priced homes aimed at middle class Americans. D.R. Horton has benefitted immensely in the recent past as cheap finance spurred new home purchases. In several U.S. markets, buying flat through cheap finances is more economical than rental markets.
“The spring selling season is off to a strong start at D.R. Horton, with robust demand driving higher sales volumes and favorable pricing,” said D.R. Horton’s Chairman, Donald Horton in a statement.
The Company’s results also topped analysts’ estimates.
Just last week, the Commerce Department said that single-family housing starts in February jumped to near five-year high level and were 30% more than the same month of 2012. Earlier this week, the Commerce Department said that new home sales climbed 1.5% in March to an adjusted annual rate of 4, 17,000. Economists are expecting that the housing sector will fuel the economic growth in the current year.
For the fiscal second quarter ended March 31, the homebuilder reported net income of $111 million or 32 cents a share compared to a profit of $40.6 million or 13 cents a share. Revenue soared 49% to $1.4 billion.
Analysts’ consensus estimate was earnings of 19 cents a share on revenue of $1.26 billion, according to a data compiled by Thomson Reuters
“With $250 million in pretax income through the first six months of the year, we have already exceeded our pretax profits for all of fiscal 2012,” added Mr. Horton.
During the quarter, the Company said that closings soared 33% from the same period of last fiscal while orders surged 34%.
The cancellation rate stood at 19% for the second quarter.