Why D.R. Horton (DHI) Stock Is Falling Today

NEW YORK (TheStreet) -- D.R. Horton (DHI) shares are down -2.2% to $21.14 on Monday following reports that pending home sales in the month of June fell after three months of growth.

The National Association of Realtors' pending home sales index showed that pending home sales fell 1.1%. Analysts had expected a 0.3% increase in the index.

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

"We rate D R HORTON INC (DHI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and increase in stock price during the past year. 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:

  • The revenue growth came in higher than the industry average of 11.0%. Since the same quarter one year prior, revenues rose by 26.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.69, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • D R HORTON INC's earnings per share declined by 23.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over 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).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Household Durables industry average, but is less than that of the S&P 500. The net income has decreased by 22.4% when compared to the same quarter one year ago, dropping from $145.90 million to $113.20 million.
  • You can view the full analysis from the report here: DHI Ratings Report
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