Why Is D.R. Horton (DHI) Up 5.7% Since Last Earnings Report?

A month has gone by since the last earnings report for D.R. Horton (DHI). Shares have added about 5.7% in that time frame, outperforming the S&P 500.

But investors have to be wondering, 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 drivers.

D.R. Horton Q4 Earnings Miss, Revenues Down Y/Y

D.R. Horton reported mixed fourth-quarter fiscal 2025 (ended Sept. 30, 2025) results, with earnings missing Zacks Consensus Estimate, while the total revenues beat the same.  On a year-over-year basis, both metrics declined.

The continued housing market softness due to declining consumer confidence and affordability concerns marred the company’s quarterly performance, resulting in lower home closings. Besides, such a weak market scenario also impacted the backlog level of the company. Furthermore, soft contributions from the Forestar 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.

It increased its quarterly dividend by 13% to 45 cents per share (or $1.80 per share annually), which is to be paid on Nov. 20, 2025, to shareholders as of Nov. 13.

D.R. Horton’s Earnings, Revenue & Margin Discussion

The company reported adjusted earnings of $3.04 per share, which missed the Zacks Consensus Estimate of $3.29 by 7.6%. The reported figure was down 22% year over year from adjusted earnings per share (EPS) of $3.92.

Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $9.68 billion, down 3.2% year over year. Contrarily, the reported figure surpassed the analysts’ expectation of $9.5 billion by 1.9%.

The consolidated pre-tax profit margin was 12.4% in the quarter, down from 17.1% a year ago.

Segment Details of D.R. Horton

Homebuilding revenues of $8.56 billion decreased 4% from the prior-year quarter. Home sales were $8.54 billion (below our model’s projection of $8.74 billion), down 4.4% year over year. Home closings were down 1% from the prior-year quarter to 23,368 homes.

Net sales orders improved 5% year over year to 20,078 (down from our projection of 21,239 units). The value of net orders increased year over year to $7.33 billion from $7.15 billion. The cancellation rate (on gross sales orders) was 20%, down from 21% a year ago.

As of Sept. 30, 2025, the sales order backlog of homes was 10,785 homes, down 11.5% year over year. Moreover, the value of the backlog was down 13.6% from the prior-year period to $4.12 billion.

Financial Services’ revenues decreased 1.7% from the year-ago level to $218.3 million (up from our expectation of $213.9 million).

Forestar contributed $670.5 million (up from our projection of $550.5 million) to total quarterly revenues with 4,891 lots sold. In the year-ago quarter, this segment contributed $551.4 million to total revenues on 5,374 lots sold.

The Rental business generated revenues of $805.4 million for the quarter (we had projected $422.2 million), up from $704.8 million a year ago.

Sneak Peek Into D.R. Horton’s FY2025

Total revenues tumbled 6.9% to $34.25 billion, primarily due to a decline in home sales revenues (down 7.3% to $31.43 billion). Homes closed declined 5.4% to 84,863 units from fiscal 2024.

In fiscal 2025, the homebuilding pre-tax profit margin of 13.8% contracted 330 basis points from fiscal 2024. 

During the fiscal year, the adjusted EPS of $11.57 declined year over year by 19.3% from $14.34.

Financial Details of D.R. Horton

D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.03 billion as of Sept. 30, 2025, compared with $4.54 billion at the end of fiscal 2024. Total liquidity as of the fiscal fourth quarter was $6.6 billion.

At the end of fiscal 2025, the company had 29,600 homes in inventory, of which 19,600 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 591,900 lots at the end of the fiscal 2025. Of these, 25% were owned and 75% were controlled through land and lot purchase contracts.

At the end of the fiscal fourth quarter, the debt-to-total capital ratio was 19.8%. The trailing 12-month return on equity was 14.6%.

During fiscal 2025, D.R. Horton repurchased 30.7 million shares of common stock for $4.3 billion. As of Sept. 30, 2025, the company's remaining stock repurchase authorization was $3.3 billion.

D.R. Horton Unveils Fiscal 2026 Guidance

The company expects consolidated revenues to be in the range of $33.5-$35 billion. This compares with $34.25 billion in fiscal 2025.

Homes closed are anticipated to be within 86,000-88,000, compared with 84,863 closed in fiscal 2025.

The cash flow provided by operations is expected to be at least $3 billion. The income tax rate is expected to be approximately 24.5%.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -14.72% due to these changes.

VGM Scores

At this time, D.R. Horton has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a score of B on the value side, putting it in the top 40% for value investors.

Overall, the stock has an aggregate VGM Score of B. 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.

Performance of an Industry Player

D.R. Horton belongs to the Zacks Building Products - Home Builders industry. Another stock from the same industry, NVR (NVR), has gained 3.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

NVR reported revenues of $2.56 billion in the last reported quarter, representing a year-over-year change of -4.4%. EPS of $112.33 for the same period compares with $130.50 a year ago.

For the current quarter, NVR is expected to post earnings of $105.42 per share, indicating a change of -24.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.5% over the last 30 days.

NVR has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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

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