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Homebuilders, Airlines, and GM: Here’s How These Five Stocks Performed During Their Latest Quarters

All three index futures are close to flat as Wall Street digests the latest earnings results released by major corporations. In this earnings edition of market-trenders, we take a look at the latest earnings reports released by D.R. Horton, Inc. (NYSE:DHI), PulteGroup, Inc. (NYSE:PHM), Alaska Air Group, Inc. (NYSE:ALK), General Motors Company (NYSE:GM), and Southwest Airlines Co (NYSE:LUV) and we see what the smart money thinks of each stock.

Hedge fund sentiment is an important metric for assessing the long-term profitability. At Insider Monkey, we track over 765 hedge funds, whose quarterly 13F filings we analyze and determine their collective sentiment towards several thousand stocks. However, our research has shown that the best strategy is to follow hedge funds into their small-cap picks. This approach can allow monthly returns of nearly 95 basis points above the market, as we determined through extensive backtests covering the period between 1999 and 2012 (see the details here).

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D.R. Horton Meets Earnings Estimates

D.R. Horton, Inc. (NYSE:DHI) earned $0.66 per share on revenue of $3.12 billion for the second quarter, meeting the consensus analyst estimate with its bottom-line results, but missing by $130 million on its top-line. Despite the revenue miss, D.R. Horton’s sales rose by 9.1% year-over-year and the company’s backlog jumped by 15% to 14,670 homes as low interest rates and a strong U.S economy stoke demand. The company’s pretax profit margin also inched up by 40 basis points to 11.7% for the period. 38 funds in our database were long D.R. Horton, Inc. (NYSE:DHI) at the end of March, down by four quarter-over-quarter.

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PulteGroup Reports Strong Results

PulteGroup, Inc. (NYSE:PHM) beat both bottom and top-line estimates with its second quarter results of EPS of $0.34 on sales of $1.8 billion, pushing its shares up by over 2.5% this morning. Analysts were expecting $0.32 per share in earnings and $1.66 billion in revenue. Sales rose by 40.6% year-over-year, driven by an 11% jump in ASP and a 27% increase in deliveries. Pulte’s backlog also jumped by 21% in dollar terms to $3.7 billion. Furthermore, the company’s Board tripled the size of its share repurchase authorization, to $1.5 billion. PulteGroup intends to buy back the $1.5 billion in shares by the end of 2017. Legg Mason Capital Management owned more than 6.6 million shares of PulteGroup, Inc. (NYSE:PHM) at the end of March.

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On the next page we’ll take a look at the earnings results of Alaska Air Group, General Motors Company, and Southwest Airlines.

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