The annual Fortune 500 list released last week offered a positive sense of the state of the homebuilding industry. Fortune 500 ranks U.S. companies with publicly available earnings information based on their gross revenue after adjustments.
Despite the housing market’s slow recovery, two of the three top homebuilders on the list saw major bumps in the rankings. And the only builder that dropped saw a minimal slide. The firms included in the extended list of 1,000 companies all climbed significantly in the rankings, indicating they will likely soon reach the coveted Fortune 500 list.
That positive momentum for the major building companies will likely continue as the market starts to pick up steam. Here are the three homebuilders that made the list — as well as a look into the current state of their businesses — and a nod to the builders who came close to making the cut:
D.R. Horton: #354
- Revenue: $8.025 billion (up 28%)
- Profits: $543 million (up 15%)
- Number of employees: 5,621
- Rank last year: #418 (up 64 spots)
- Years on Fortune 500 list: 13
D.R. Horton, based in Fort Worth, TX, is the largest homebuilder in the U.S. 2014 was a big year for the builder, including new CEO David Auld coming aboard and the launch of the company’s Express Homes division for entry-level properties. D.R. Horton led all big builders in backlog value, revenue per employee, and growth in closings, according to Builder Magazine.
In April of this year, the company reported a 30% jump in orders during the second quarter of its fiscal year but a slowdown in average selling price. D.R. Horton attributed the success of the Express Homes division to the decline, as more homes were selling at lower prices.
- Revenue: $7.780 billion (up 31%)
- Profits: $639 million (up 33%)
- Number of employees: 6,825
- Rank last year: #431 (up 67 spots)
- Years on Fortune 500 list: 11
Lennar, based in Miami, FL, saw the highest jump in the Fortune 500 rankings. The company was the top builder in total shareholder return last year, at 35.3%, according to Builder Magazine. In March, Lennar reported better-than-expected quarterly profits and revenues for the first quarter of 2015.
Lennar focuses on buyers with bigger budgets, and succeeds by raising prices of new, single-family homes for those customers who can afford the luxury properties. Surprisingly, however, the big builder ventured into the rental-home market in March when it opened its first community of new, single-family properties for rent.
- Revenue: $5.822 billion (up 2%)
- Profits: $474 million (down 81%)
- Number of employees: 4,149
- Rank last year: 446 (drop of 7 spots)
- Years on Fortune 500 list: 13
PulteGroup, based in Atlanta, was the only of the three Fortune 500 homebuilders to fall in the rankings. Although the big builder had the fourth largest shareholder return of its competitors, at 6.9%, according to Builder Magazine, the company has struggled in other areas.
In April, the company reported disappointing Q1 results. PulteGroup said its earnings were hurt by construction delays, acquisition costs, and greater income tax expenses, according to Bloomberg. On the positive side, the builder saw orders rise 6% from the same period in 2014.
Nine homebuilders were recognized by Forbes in their rankings of the top 1,000 companies. Keep an eye on these firms, as some have been making swift moves up the list. If their momentum continues, the Fortune 500 could include a larger section for the homebuilding industry next year.
Those companies are:
- #577 NVR (up 1 spot from 2014)
- #628 Toll Brothers (up 163 spots from 2014)
- #735 Taylor Morrison Home (up 145 spots from 2014)
- #830 Ryland Group (up 103 spots from 2014)
- #887 Standard Pacific (up 101 spots from 2014)
- #895 KB Home (up 53 spots from 2014)
- #957 Meritage Homes (not on the 2014 list)
- #991 Hovnanian Enterprises (not on the 2014 list)