D.R. Horton Slides on Disappointing Loss

(D.R. Horton earnings report updated with analyst commentary.)

FORT WORTH, Texas ( TheStreet) -- D.R. Horton ( DHI) shares continued to slide Friday after the U.S. homebuilder posted wider-than-expected fiscal-first quarter losses as new-home orders fell, cancellations rose and its backlog of homes under contract shrank.

DR Horton

D.R. Horton said Thursday it booked a net loss of $20.4 million, or 6 cents loss per share, a far steeper loss than the $2.8 million, or 3-cent loss-per-share, analysts had expected.

"We expected coming into this quarter that the road ahead would be tougher than the road behind for DHI given that its first-time buyer focus and spec strategy was more or less tailor made for the tax-credit supported environment of last year," noted Stifel Nicolaus analyst Michael Widner. "With that crutch pulled out we anticipated a bit of slippage."

D.R. Horton shares tumbled 3.4% to trade around $12.37 Friday morning after closing 3.2% lower Friday amid heavy trading.

The analyst added that "we find CEO Don Tomnitz' candor surrounding the sector's challenges refreshing, honest, and realistic," commenting on what he heard in D.R. Horton's earning conference call with investors. "For valuations we also think it's nice to have Don's commentary out of the way early in reporting so that glass-half-full peers can talk valuations higher on their views of what might be as opposed to what is."

"Nothing in results changed our view that the company is one of the strongest and most disciplined competitors in the sector," Widner concluded. We like the land-lighter model and the incessant focus on profitability and growth. In a capital intense commodity sector we see this as a great approach for shareholders. We're just lukewarm on the valuation given the housing environment."

If you liked this article you might like

Housing Stocks Fall as Fed Leaves Rates Unchanged

D.R. Horton Is Building Toward the $50 Mark

Pulte Is Doing Little to Boost Sentiment, D.R. Horton Will Follow Suit