D.R. Horton Inc., the largest U.S. homebuilder, reported fiscal second-quarter earnings that beat analysts’ estimates as it increased sales amid a tight inventory of properties on the market.
Net income for the three months through March climbed to $195.1 million, or 52 cents a share, from $147.9 million, or 40 cents, a year earlier, the Fort Worth-based company said in a statement on Thursday. The average estimate of 16 analysts was for earnings of 46 cents a share, according to data compiled by Bloomberg. D.R. Horton raised its full-year pre-tax profit margin estimate.
D.R. Horton has boosted sales volumes with the help of its entry-level Express Brand, which appeals to buyers facing a persistently small number of existing homes listed for sale. There were 1.98 million houses on the market at the end of March, down 1.5 percent from a year earlier, the National Association of Realtors reported Wednesday.
“Horton’s early push into the entry-level has given them an early-mover advantage relative to peers, which, until more recently, have focused almost exclusively on the move-up segment,” Drew Reading, a Bloomberg Intelligence analyst, wrote in an e-mail before the company announced its results. “Their view, which has been validated, was that a lack of inventory at affordable price points was holding back demand.”
Homebuilding revenue rose 16 percent to $2.7 billion in the second quarter from a year earlier, D.R. Horton said. Home sales completed in the quarter climbed 12 percent to 9,262, and orders increased 10 percent by volume. D.R. Horton forecasts full-year pre-tax profit margin in a range of 10.7 percent to 11.2 percent compared with prior guidance of 10.5 percent to 11 percent. The second-quarter margin widened by 130 basis points to 10.9 percent, the company said on Thursday.
“Solid performance in our three core brands is enabling us to capitalize on market opportunities and expand our industry-leading market share,” Chairman Donald Horton said in the statement. “We are well-positioned for the second half of fiscal 2016.”