Analysts have reported that D.R. Horton (DHI), a company that builds homes and sells building materials in the U.S., ‘s quarterly results were better than expected.
D.R. Horton’s second-quarter (January-March) sales were $9.11 billion, a 14.2% increase year over year, and its net income was $1.17 billion, a 24.4% increase. Earnings per share (EPS) were $3.54, exceeding all consensus. In the second quarter, D.R. Horton bought back $400 million of its own shares and paid dividends of $99.2 million.
“Improved U.S. housing demand drove the results,” said Choi Bo Won, a Korea Investment & Securities research analyst.
Although U.S. mortgage rates remain high, D.R. Horton’s second-quarter home sales revenue increased by 13.7% yearly to $8.47 billion, marking a second consecutive quarter of growth. This is due to increased home sales revenue across all price ranges in the second quarter, unlike in the first quarter, when sales of low-priced homes under $300,000 and high-priced homes over $500,000 decreased.
The gross profit margin of home sales also increased to 23.2% quarter-on-quarter. The number of completed housing units also increased by 14.7% yearly to 22,548 units.
Researcher Choi Bo Won said, “Although the delay in lowering the U.S. base interest rate and the 30-year mortgage rate remaining 6-7% is a burden, the increase in U.S. building permits and the slowdown in the decrease of new home sales are positive.”
In the southern region, where D.R. Horton has a high market share, existing home sales are also increasing. Despite a 13.6% drop in stock prices due to the rise in U.S. Treasury rates since the end of March, D.R. Horton raised its annual sales guidance from $36-37.3 billion to $36.7-37.7 billion even in the long-term high-interest rate environment. The 12-month leading price-earnings ratio (PER) is also only 9.6 times.
Researcher Choi emphasized, “In the short term, geopolitical risks and uncertainty about the Federal Reserve’s policy will limit the rise in D.R. Horton’s stock price, but it is a representative homebuilder company that can be noted when the rise in Treasury rates slows down when the timing of the base rate cut is specified.”
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