D.R. Horton Inc.’s (DHI - Analyst Report) second-quarter fiscal 2015 results surpassed the Zacks Consensus Estimate for both revenues and earnings for the second time in a row.

Adjusted earnings of 40 cents per share in the second quarter of fiscal 2015 beat the Zacks Consensus Estimate of 39 cents by 2.6%. Earnings grew 13% year over year from the prior-year level of 38 cents, driven by strong profits and a double digit increase in homebuilding revenue.

Homebuilding revenues of $2.34 billion climbed 38% year over year and surpassed the Zacks Consensus Estimate of $2.25 billion by 4.0% driven by higher number of homes closed and a solid increase in order value.

Quarter Details

Home sales increased 38% year over year to $2.32 billion due to double digit increase in sales of all the three brands, D.R. Horton, luxury brand Emerald Homes and the entry-level brand, Express Homes. Land sales contributed $19.7 million to revenues, higher than $16.6 million in the prior-year quarter.

Net sales orders rose 30% in the second quarter to 11,135 homes as housing demand improved in the spring selling season. The value of net orders grew 33% to $3.17 billion. Cancellation rate stood at 20%, lower than 23% in the first quarter. All the regions reported an increase in order numbers and values.

Home closings were up 33% to 8,243 homes in the reported quarter. The upside was driven by growth in all the regions.

The quarter-end sales order backlog rose 21% to 12,177 homes. Backlog value grew 27% to $3.57 billion. Sales order backlog represents homes under contract but not yet closed at the end of a certain period. Backlog rose in all the regions.

Gross profit on home sales was $456.9 million, up 21.1% year over year. Homebuilding selling, general and administrative expenses (SG&A) were $242.4 million, up 29% from the prior-year quarter.

Consolidated pre-tax income was $230.1 million in the quarter, up 14% year over year.

Outlook

D.R. Horton is optimistic about the second half of 2015. The company believes it is well positioned to meet increasing housing demand on the back of robust community count, finished lot supply and inventory of homes available for sale. The company intends to focus on increasing revenues and profits at a double digit rate.

D.R. Horton carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Investors interested in the building sector can also consider Toll Brothers Inc. (TOL - Analyst Report), Meritage Homes Corp. (MTH - Snapshot Report) and Ryland Group Inc. (RYL - Snapshot Report). While Toll Brothers and Ryland Group sport a Zacks Rank #1 (Strong Buy), Meritage Homes carries a Zacks Rank #2.