Summary
- D.R. Horton had another excellent quarter thanks to rapidly rising new orders and strong pricing.
- The company continues to benefit from its lower income focus and has put its cash flow to good use by reducing debt levels and increasing dividends.
- I expect some loss of momentum in case rates start to rise. Other than that, this stock continues to be one of my favorite homebuilders.
Homebuilding stocks have been a tough nut to crack this year. Stocks in this industry have been in a steady uptrend since the start of the year after an abysmal second half of 2018. The rebound was caused by the fact that stocks had some catching up to do and the fact that rapidly falling rates caused affordability to rise in an overheated housing market. D.R. Horton (NYSE:DHI) has been one of my go-to housing stocks for a while (article). The company is already operating in a lower price segment and has reported tremendous results in the past. The just released fourth quarter results confirm this and show rapidly rising new orders growth. The company is also spending a lot of free cash flow on debt reduction, making this company a well-run long-term stock.
Source: D.R. Horton
Q4 Was Another Excellent Quarter
The just released quarter included everything a bull could have hoped for. First of all, adjusted EPS reached $1.35. This is well above expectations of $1.25 and 11% higher compared to the prior-year quarter. Over the past few years, the company had only one quarter without positive growth.
