Tomahawk, WI 8/16/2013 (Basicsmedia) – D.R. Horton, Inc. (NYSE:DHI) has presence in around 26 states in the U.S, in addition to carrying out its operations in some seventy seven markets in the same country, which are considered to be metropolitan in nature. It is one of America’s foremost homebuilding companies. It also acquires and develops new parcels of land by building residential houses, wherever it can, in the said 26 states in the U.S.  Reports have been circulating everywhere to the effect that the company has found ways of ensuring that its stock moves up, and not down. How true is this?

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Chart shows DHI’s revenue in the last two years, vis-à-vis operating income and operating margin. Image is from www.google.com/finance

Factors Responsible for the Rise in DHI Stock

The demand for single detached homes, as well as for attached homes in the U.S has started going up once again after the crisis of 2008 which affected the housing sector. Examples of the homes or buildings whose demand has multiplied in the recent past include condominiums, triplexes, duplexes and town homes.  Fortunately, these are the sort of homes which DHI is ion the business of constructing on land which it acquires and proceeds to develop. If you take a look at the company’s results for the last four quarters, you will see that revenue has grown manifold.

When you compare the first quarter 2012 revenue, and for the same period in 2013, you will see clearly that there has been tremendous growth in this area. If you examine the chart above, and focus on the Q2 of 2012 vs Q2 2013, you will see that revenue has grown. Not only that, but there has been a steady increase in the growth of the company’s operating income, as well as the operating margin. Focusing on the last eight quarters, it is clear to everyone that the company has seen a surge in profit to the tune of 719%, which is incredible hence the optimism by investors.

When the company announces their financial result for Q3 2013, there is every reason to look forward to record profit gain compared to the same period last year. This will simply be in keeping up with the trend which has been going on for the last two years. It is this trend which has led investors to ask, and with a lot of optimism, whether the company has finally made a turn from losses to profits, and how long this is expected to continue. Based on what I’ve seen, I wouldn’t begrudge investors of this new optimism they have for the DHI stock. It is warranted.

Can This Rise in DHI Stock Be Sustained?

I believe that as long as the market continues showing a deep appreciation for the types of houses which DHI makes, the company has a bright future. The fact that DHI is not only relying on the market, but taking measures to influence demand by predicting the types of houses which customers will continue asking for, is a sure plus and will produce the kind of results it is hoping for. DHI has to continue taking the initiative by coming up with innovative products, much like what it has been doing up to this point, and which has worked to its favor.

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