D.R. Horton Inc. (DHI) is one of the leading national homebuilders. The company offers a diversified line of homes across various price points through its multi-brand platform. While its newly introduced Express brand caters to entry-level buyers looking for affordability, its high-end brand, Emerald, targets luxury buyers. Moreover, the company enjoys one of the broadest geographic diversities in the industry and has been reporting strong order trends for some time.

However, the company’s policy to increase the sales pace through higher incentives, in order to improve order trends, hurt margin. In addition, cost increases in excess of sales price increases, and unfavorable product mix hurt gross margins. A higher proportion of lower priced Express Homes in home closings unfavorably impact product mix and thereby bring down the gross margins.

Investors should also note the recent earnings estimate movements for DHI has been mostly been downwards. Moreover, DHI posted negative earnings surprises in two out of the past four quarters, with an average surprise of -2.77%.

Currently, DHI has a Zacks Rank #3 (Hold), but that could definitely change following D.R. Horton’ earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:

Earnings: DHI beat on earnings. Our consensus earnings estimate called for EPS of $0.35/share, and the company reported EPS of $0.39 instead. Investors should note that these figures take out special items.

Revenues: DHI reported homebuilding revenues of $2.25 million. This surpassed our consensus estimate of $2.11 billion.

Key Stats to Note: Order number increased 35% in the quarter.