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D.R. Horton, Inc. (DHI) is a national builder, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets. Homes vary in size from 1,000 to 5,000 square feet, with prices ranging from $90,000 to $900,000. In fiscal year 2008, the company closed 26,396 homes with an average closing sale price of approximately $233,500.
D.R. Horton reported a fourth quarter net loss of $2.53 per share. This is due to lower gross margin on home sales and larger charges taken for inventory impairments and land option cost writeoffs. D.R. Horton generated $480 million in operating cash flow in Q4, thanks to land sales and fewer dollars invested in homes and land & lots.
Also, DHI has cut the quarterly dividend in half to $0.0375 from $0.075, which will help to preserve cash on the balance sheet. The company said it expects to receive a federal income tax refund of $622 million in December 2008.
We maintain our Hold recommendation on shares of DHI. Our target price is $7.50 per share.
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