D.R. Horton Beats Estimates but Advises Caution

Nov. 15, 2006 2:41 AM ETD.R. Horton, Inc. (DHI)
Judith Levy profile picture
Judith Levy
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Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:

D.R. Horton Sticks With Caution [TheStreet.com]

Summary: D. R. Horton, the largest homebuilder in America, managed to beat Q4 earnings estimates despite a 51% drop in profits by closing more home sales than expected in the quarter. Investors rewarded the news by bidding up the stock 7.5% to $24.05, but the company warned that the market is continuing to deteriorate. Horton earned $277.7 million in the quarter, or $0.88/share, down from $563.8 million, or $1.77/share, a year earlier. Analysts were expecting $0.69. Revenue fell 4% to $4.8 billion, ahead of analysts' $3.93 billion estimate. Management hopes to protect Horton from the downturn by restricting speculative home starts (homes built without a buyer in place) from the current 50% of its inventory to the low 30% range. It also plans to use most of its free cash flow next year to pay down debt and strengthen the balance sheet rather than buy new land.
Related links: Media coverage: BloombergNewsday. Commentary: Housing Stocks' Recent Runup -- Sustainable?The NAR Tries to Sell the Lack of Home SalesHousing Stocks: Watching the RSIHousing: What Does "Return to Mean" Really Mean?.
Potentially impacted stocks and ETFs: D.R. Horton Inc. (NYSE:DHI) • Competitors: 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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This article was written by

Judith Levy profile picture
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Seeking Alpha's Judith Levy, a U.S.-born writer and editor, worked for several years as a freelance financial editor in New York, then served as Managing Editor of Latin American Equity Research at ABN AMRO for three years. She has an A.B. in English from Duke University and a Master's in International Relations from Balliol College, Oxford.

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