Why Is D.R. Horton (DHI) Up 10.3% Since Last Earnings Report?

A month has gone by since the last earnings report for D.R. Horton (DHI). Shares have added about 10.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is D.R. Horton due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

D.R. Horton Q3 Earnings & Revenues Top, Home Closings Down Y/Y

D.R. Horton reported better-than-expected third-quarter fiscal 2025 (ended June 30, 2025) results, with earnings and total revenues topping Zacks Consensus Estimate but decreasing on a year-over-year basis.

The continued housing market softness due to declining consumer confidence and affordability concerns marred the company’s quarterly performance, resulting in lower home closings, alongside decreased average selling price (ASP). Besides, such a weak market scenario also impacted the backlog level of the company. Furthermore, soft contributions from the Rental operations and the Financial Services segment added to the downtrend.

Although the company is actively engaging in offering necessary sales incentives to drive traffic and incremental sales, it is adversely impacting the bottom line. This, alongside elevated selling, general and administrative expenses, is hurting the margins.

Nonetheless, the company’s strong liquidity, low leverage and national scale offer significant operational and financial flexibility. Its disciplined approach to capital allocation, combined with its flexible lot supply and affordable product offerings, positions D.R. Horton to maximize returns across its communities while adapting to evolving market conditions.

Earnings, Revenue & Margin Discussion

The company reported adjusted earnings of $3.36 per share, which topped the Zacks Consensus Estimate of $2.90 by 15.9%. The reported figure was down 18% year over year from adjusted earnings per share (EPS) of $4.10.

Total revenues (Homebuilding, Forestar, Rental, and Financial Services) were $9.23 billion, down 7% year-over-year. Contrarily, the reported figure surpassed the analysts’ expectation of $8.78 billion by 5.1%. The consolidated pre-tax profit margin was 14.7% in the quarter under review, down from 18.1% a year ago.

Segment Details

Homebuilding revenues of $8.58 billion decreased 7% from the prior-year quarter. Home sales totaled $8.56 billion, representing a 7.3% year-over-year decline. Home closings were down 4% from the prior-year quarter to 23,160 homes.

Net sales orders inched up 0.3% year over year to 23,071. The value of net orders decreased 3% year over year to $8.4 billion from $8.7 billion. The cancellation rate (on gross sales orders) was 17%, down from 18% a year ago. The sales order backlog of homes at the end of the fiscal third quarter was 14,075 homes, down 16% year over year. Moreover, the value of the backlog was down 19% from the prior-year period to $5.3 billion.

Financial Services’ revenues decreased 6% from the year-ago level to $227.8 million.

Forestar contributed $390.5 million to total quarterly revenues with 3,605 lots sold, indicating growth from $318.4 million in revenues generated a year ago on 3,255 lots sold.

The Rental business generated revenues of $380.7 million for the quarter, down from $413.7 million a year ago.

Balance Sheet Details

D.R. Horton’s cash, cash equivalents and restricted cash totaled $2.66 billion as of June 30, 2025, compared with $4.54 billion at the end of fiscal 2024. It had $2.9 billion of available capacity on the revolving credit facility as of June 30. Total liquidity was $5.5 billion.

At the end of June 2025, the company had 38,400 homes in inventory, of which 25,000 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 601,400 lots at the end of the fiscal third quarter. Of these, 24% were owned and 76% were controlled through land and lot purchase contracts.

At the end of the fiscal third quarter, debt totaled $7.2 billion, with a debt-to-total capital of 23.2%. The trailing 12-month return on equity was 16.1%. D.R. Horton repurchased 26.2 million shares of common stock for $3.6 billion during the first nine months of fiscal 2025. As of June 30, 2025, the company's remaining stock repurchase authorization was $4 billion.

Fiscal 2025 Guidance Updated

D.R. Horton now expects consolidated revenues to be in the range of $33.7-$34.2 billion compared with the previously expected range of $33.3-$34.8 billion. This compares with $36.8 billion in fiscal 2024. Homes closed are anticipated to be within 85,000-85,500 homes compared with the previously expected range of 85,000-87,000 units. This compares with 89,690 homes closed in fiscal 2024.

The cash flow provided by operations is still expected to be more than $3 billion. The income tax rate is still expected to be approximately 24%.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, D.R. Horton has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, D.R. Horton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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