Centex Earnings, Orders Rise

Centex (CTX Quote), one of the largest U.S. homebuilders, beat analysts' earnings estimate for its latest quarter and raised its guidance for the full year, based on a strong order backlog.

Centex said net earnings for its fiscal second quarter ended Sept. 30 totaled $335 million, or $2.49 a share, up from $211 million, or $1.61 a share, a year ago. Earnings for the recent quarter were boosted by a tax refund that contributed $28 million, or 21 cents a share, to results. Analysts polled by Thomson First Call expected the company to report earnings of $2.09 for the second quarter.

Centex said second-quarter revenue increased 36% to $2.89 billion, in line with Wall Street estimates. The company's operating margin grew 2.6 points to 15.9% in the current quarter. Home closings increased 17% to 9,157 homes, and orders rose 12% to 9,555. Centex said its backlog rose 19% on a unit basis.

Centex's results were aided by $173 million in land sales and other related revenue, primarily from lot sales in Naples, Fla., and Washington, D.C. The land sales contributed $59 million to operating earnings in the quarter, equaling about 43 cents share.

Stephen East, an analyst with Susquehanna Financial Group, was expecting Centex to post just $25 million in earnings from land sales. He also didn't expect the 21-cents-a-share boost to earnings from the tax refund.

Still, even putting aside those unexpected one-time gains, East says Centex's results looked solid, citing the revenue and order growth.

"If other aspects of their business looked weak, I would look at (the land sales and tax refund gains) a lot more cynically," says East, whose firm does not provide investment banking services to Centex.

Centex raised its fiscal-year earnings guidance to $9.65 to $9.85 a share from its previous projection of $9.10 to $9.35. Analysts, on average, expect earnings of $9.37 a share for the year ending March 30.