D.R. Horton Earnings: Surprisingly Strong Orders Show Spring Selling Season Off to a Good Start

Shares of D.R. Horton traded higher on April 20 after the no-moat-rated homebuilder reported surprisingly strong fiscal second-quarter results. The firm delivered 19,664 homes during the quarter, 19% above the midpoint of management’s guidance, and total sales of $8 billion exceeded guidance by a whopping $1.5 billion. We think shorter construction cycle times (that is, the amount of time it takes to complete a home) and reduced unsold completed home inventory were primary factors behind D.R. Horton’s home delivery outperformance. Management said cycle times decreased by 12 days during the quarter, which we think is a function of improving building materials supply chains and better labor availability (due to slowing market conditions).