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D.R. Horton Inc. reported yesterday that quarterly profits fell 65% during its 2007 fiscal first quarter but shares still gained 4.6% as they came in above analyst expectations.dhi By the numbers, net income declined to $109.7 million (EPS $0.35), down from $310.1 million EPS $0.98) in the year-earlier period. Revenue slid 1.4% to $2.8 billion. D.R. Horton's slumping profits match profit declines across the board for homebuilders, amid the biggest slump in home sales in 15 years. Shares rose yesterday despite the bad earnings. With much negativity already built in and Thomson Financial analysts predicting EPS of just $0.33, the $0.35 EPS reported sent shares higher by $1.24 to a closing price of $28.37. "The results are generally favorable given the environment," said Morningstar analyst Eric Landry.

• Sources: Press Release, Wall Street Journal, New York Times, Bloomberg, MarketWatch
• Related commentary: Housing Stocks: Is the Worst Over?, Assessing the Homebuilder Stocks, Homebuilders D.R. Horton, Meritage Post Disappointing Sales
• Potentially impacted stocks and ETFs: D.R. Horton, Inc. (DHI). Competitors: Meritage Homes Corp. (MTH), KB Home (KBH), Centex Corp. (CTX), Lennar Corp. (LEN), Pulte Homes Inc. (PHM). ETFs: iShares Dow Jones US Home Construction (ITB), SPDR Homebuilders (XHB)

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Source: D.R. Horton's Profit Falls 65%, Beats Estimates