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NEW YORK (TheStreet) -- D.R. Horton (DHI) - Get D.R. Horton, Inc. Reportwas rising 8.4% to $22.69 on Tuesday after the homebuilder reported that its earnings rose 86% in the first quarter that ended on Dec. 31, 2013.

The largest U.S. home builder by revenue raised prices and delivered more homes despite a sluggish housing recovery. D.R. Horton's net income climbed to $123.2 million, or 36 cents a share, from $66.3 million, or 20 cents a share, in the same period one year earlier. Orders by value also increased 14% to $1.5 billion, and average sales price climbed 10% to $275,600. Finally, the value of properties under contract climbed 20% to $2.1 billion.

The Fort Worth, Texas-based company has typically constructed homes for first-time buyers in the past, but it has started to deal with more established buyers who can afford higher prices. D.R. Horton also uses its size to reduce its costs and increase its profitability.

"Housing market conditions continue to improve across most of our operating markets and our weekly sales pace has accelerated in January," said Chairman Donald R. Horton said in the company's statement. "We are well-positioned to capture demand in the spring selling season."

TheStreet Recommends

TheStreet Ratings team rates D R HORTON INC as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate D R HORTON INC (DHI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DHI's revenue growth has slightly outpaced the industry average of 29.8%. Since the same quarter one year prior, revenues rose by 39.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to -$94.80 million or 21.58% when compared to the same quarter last year. Despite an increase in cash flow of 21.58%, D R HORTON INC is still growing at a significantly lower rate than the industry average of 72.06%.
  • D R HORTON INC has improved earnings per share by 33.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, D R HORTON INC reported lower earnings of $1.34 versus $2.74 in the prior year. This year, the market expects an improvement in earnings ($1.56 versus $1.34).
  • DHI's debt-to-equity ratio of 0.86 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • You can view the full analysis from the report here: DHI Ratings Report