D.R. Horton, Inc.
DHI
has acquired one of the largest builders in Northwest Arkansas, Riggins Custom Homes. The company expects to pay $107 million for the acquisition, which will expand its local start-up market position in Northwest Arkansas.
Shares of D.R. Horton have gained 3.5% during the trading session on Dec 15, 2022.
The acquisition of Riggins Custom Homes and related assets will add approximately 3,000 lots, 170 homes in inventory and 173 homes in sales order backlog to D.R. Horton’s portfolio.
The company will integrate the Riggins operations with the current D.R. Horton platform in Northwest Arkansas. Notably, Riggins closed 153 homes (generating $48 million in revenues) with an average home size of 1,925 square feet and an average sales price of $313,600, during the trailing 12 months that ended Nov 30, 2022.
Accretive Acquisitions: a Growth Driver
Acquisitions have been an important part of D.R. Horton’s growth strategy. The company is fast acquiring homebuilding companies in desirable markets. The company’s strong cash position and low debt/capital ratio allowed it to make strategic land purchases even during the downturn, giving it a significant competitive advantage.
For the first quarter of fiscal 2022, the company invested $2.2 billion in lots, land and development, of which $1.2 billion was for finished lots, $570 million for land development and $390 million was allotted to acquire land. Again, second-quarter homebuilding investments in lots, land and development totaled $2.1 billion, of which $1.2 billion was for finished lots, $630 million was for land development and $260 million was to acquire land.
For the third quarter, the company invested $1.75 billion in lots, land and development, of which $890 million was for finished lots, $680 million for land development and $180 million was allotted to acquire land. For the fourth quarter, the company invested $1.5 billion in lots, land and development, of which $780 million was for finished lots, $560 million for land development and $150 million was allotted to acquire land.
The company has selectively invested in attractively-priced land and lots in the past few years, allowing it to bring new attractive communities in desirable markets. D.R. Horton’s well-stocked supply of land, plots and homes provide it with a strong competitive position to meet the demand in future quarters, thereby growing sales and home closings.
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D.R. Horton stock has gained 23.5% over the past three months, outperforming the Zacks
Building Products – Home Builders
industry’s 19.3% rise. The company’s earnings are expected to grow 1.7% in fiscal 2023.
Zacks Rank & Stocks to Consider
D.R. Horton currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Some better-ranked stocks which warrant a look in the Zacks
Construction
sector include:
Headquartered in Temple, GA,
Janus International Group, Inc.
JBI
, carrying a Zacks Rank #2 (Buy), manufactures and supplies turn-key self-storage and commercial and industrial building solutions. Solid backlog levels, an impressive project pipeline, productivity improvements and commercial actions, including pricing, are expected to drive growth. The company is expected to benefit from its one-stop-shop offering with a leading market share in self-storage doors and related design and installation services.
Janus’ earnings for 2023 are expected to rise 16.9%. The Zacks Consensus Estimate for current-year and next-year earnings has improved to 75 cents per share and 88 cents per share from 69 cents per share and 80 cents per share, respectively, over the past 60 days.
Altair Engineering
ALTR
— holding a Zacks Rank #2 — provides software and cloud solutions in simulation, high-performance computing, data analytics and artificial intelligence worldwide.
ALTR’s expected earnings growth rate for 2023 is 21.5%.
Sterling Infrastructure, Inc.
STRL
— carrying a Zacks Rank #2 — provides transportation, e-infrastructure, and building solutions.
STRL’s expected earnings growth rate for 2023 is 6.3%. The Zacks Consensus Estimate for 2023 earnings has improved to $3.37 from $3.26 over the past 60 days.
(We are reissuing this article to correct a mistake. The original article, issued on December 16, 2022, should no longer be relied upon.)
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