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D.R. Horton Shares Fall as CEO Warns of Weak Job Growth

Monday, 12 Nov 2012 04:49 PM

Shares of D.R. Horton Inc., the largest U.S. homebuilder by volume, fell after the company's chief executive officer cautioned that employment growth will remain weak next year, potentially hurting sales of new houses.

“I still don’t see a lot of jobs being created,” CEO Donald Tomnitz said during a conference call Monday. “And I also see the fact that there are potential layoffs in a number of industries, especially the defense industry.”

D.R. Horton fell 5.8 percent to $19.40 at the close in New York, the biggest decline since June 1. The 11-member Standard & Poor’s 1500 Homebuilding index fell 4.1 percent. Atlanta-based Beazer Homes USA Inc., which isn’t part of the index, fell to 17 percent to $13.77 after reporting a wider-than-expected fiscal fourth-quarter loss.

The U.S. unemployment rate was 7.9 percent last month, up from 7.8 percent in September, according to Labor Department data. Demand for new houses has revived as buyers, seeking to take advantage of low interest rates and a decline in property prices, find a tight supply of existing homes to choose.

“We favor DHI’s balance sheet and conservative land- acquisition strategy, but remain cautious regarding the strength of the housing recovery,” Michael Souers, a Standard & Poor’s analyst, said in a note to investors Monday, referring to D.R. Horton by its ticker symbol. He maintained his hold rating on the builder’s shares.

Net income at Fort Worth, Texas-based D.R. Horton rose to $100.1 million, or 30 cents a share, for the three months ended Sept. 30, compared with $35.7 million, or 11 cents, a year earlier, it said in a statement Monday. The average estimate of 20 analysts in a Bloomberg survey was for earnings of 28 cents.

Sales Increase

Sales of new homes rose to an annual pace of 389,000 in September, the highest since April 2010, the Commerce Department reported on Oct. 24. Housing starts surged 15 percent in September to an annual pace of 872,000, the fastest since July 2008.

D.R. Horton’s net new orders totaled 5,276, with a value of $1.3 billion, compared with 4,241 homes valued at about $900 million a year earlier. The company’s fiscal 2012 profit was the most in six years and the company expects to earn more money next year, Tomnitz said.

“We feel comfortable that we’ll have a much better 2013 than we did 2012,” he said.

Horton’s shares rose 63 percent this year through Friday, compared with an 80 percent gain for the Standard & Poor’s homebuilding index.

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Shares of D.R. Horton, the largest U.S. homebuilder by volume, fell after the company's chief executive officer cautioned that employment growth will remain weak next year, potentially hurting sales of new houses.
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