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D.R. Horton, Inc.

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D.R. Horton posted robust second-quarter fiscal 2016 results with both its earnings and sales beating the Zacks Consensus Estimate. Earnings of $0.52 per share surged 30% year over year on higher home sales, steady margins and increased SG&A leverage. After weak numbers in the previous quarter, home closings increased 12% in the reported quarter, which together with pricing gains, resulted in higher home sales. The company retained its revenue guidance but raised its profit expectation. D.R. Horton expects to continue to do well in 2016 on the back of its solid community count, strong backlog position and well stocked inventory of land, lots and homes. However, gross margin pressures due to moderating sales price increases and unfavorable product mix remain the concerns. Management expects gross margin increase to remain essentially flat in fiscal 2016 with no significant improvement.

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