NEW YORK (TheStreet) -- Shares of D R Horton (DHI) are down -11.29% to $22. on very heavy trading volume, as the country's biggest homebuilder by revenue fell the most in nearly five years after saying it's increasing incentives to boost orders, reducing profitability as the broader new home market stumbles, Bloomberg reports
The company said that net income for the third quarter ending June 30 declined to $113.1 million, or 32 cents a share, from $146 million, or 42 cents, a year ago.
The average estimate of 10 analysts was 49 cents a share, according to Bloomberg data.
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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 some important positives, 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, increase in net income, attractive valuation levels, increase in stock price during the past year and growth in earnings per share. 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 17.7%. Since the same quarter one year prior, revenues rose by 21.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Household Durables industry average. The net income increased by 17.9% when compared to the same quarter one year prior, going from $111.00 million to $130.90 million.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- D R HORTON INC has improved earnings per share by 18.8% 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 ($1.72 versus $1.34).You can view the full analysis from the report here: DHI Ratings Report