(Adds shares, background, analysts' comments)
By Arunima Banerjee
April 20 D.R. Horton Inc's quarterly
profit edged past estimates on Thursday but concerns about the
resilience of a recovery in the U.S. housing market weighed on
the company's shares.
The largest U.S. homebuilder's shares were down 2.8 percent
in afternoon trading, dragging peers including Lennar Corp
and PulteGroup Inc lower.
Several analysts estimated that the number of homes sold by
D.R. Horton could potentially slow in the second half of the
"Shares are trading modestly lower on decelerating growth in
the back half as the increased 2017 guidance mainly reflects
fiscal 2Q outperformance," Keefe, Bruyette & Woods analyst Jade
Rahmani wrote in a client note.
The recovery in the U.S. homebuilding sector has been
clouded this year by stagnant wages and higher interest rates.
While annual wage growth has remained firmly below 3 percent,
mortgage rates are expected to climb.
Homebuilders have also been struggling with limited supply
and a shortage of labor.
A string of weak housing data in recent weeks has also
weighed on the sector. Single-family homebuilding, which
accounts for the largest share of the residential housing
market, fell 6.2 percent in March.
The company's second-quarter results, however, were largely
positive, heading into the crucial spring selling season.
Orders, a key indicator of future revenue for homebuilders,
rose 13.8 percent to 13,991 homes in the second quarter ended
March 31, D.R. Horton said.
The company sold 10,685 homes in the quarter, up from 9,262
in the year-earlier period.
Sales of new U.S. single-family homes - the kind D.R. Horton
specializes in - touched a seven-month high in February.
The Fort Worth, Texas-based company raised its 2017 revenue
forecast to $13.6 billion-$14.0 billion from $13.4 billion-$13.8
D.R. Horton said it expects to sell 44,500-46,000 homes,
compared with its previous forecast of 43,500-45,500.
CFRA analyst Ken Leon played down the stock movement.
"It (stock movement) is an overreaction to extrapolating a
slower growth in the second half, but that may not be the case."
Net income rose to $229.2 million, or 60 cents per share, in
the quarter, from $195.1 million, or 52 cents per share, in the
Home sales rose 17.6 percent to $3.16 billion.
Analysts expected profit of 59 cents per share, according to
Thomson Reuters I/B/E/S.
(Reporting by Arunima Banerjee in Bengaluru; Edited by Martina
D'Couto and Saumyadeb Chakrabarty)