It has been about a month since the last earnings report for D.R. Horton (DHI). Shares have added about 5.8% 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 its most recent earnings report in order to get a better handle on the important catalysts.
D.R. Horton's Q1 Earnings & Revenues Beat, Net Sales Orders Up Y/Y
D.R. Horton reported better-than-expected first-quarter fiscal 2026 (ended Dec. 31, 2025) results, with earnings and total revenues beating the Zacks Consensus Estimate. However, 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, intensive sales incentives to curb affordability issues pressured the bottom line of D.R. Horton. The company expects affordability constraints and cautious consumer sentiment to continue to impact new housing demand.
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.
D.R. Horton's Earnings, Revenue & Margin Discussion
D.R. Horton reported earnings of $2.03 per share, which topped the Zacks Consensus Estimate of $1.96 by 3.6%. But the reported figure was down 22.2% year over year from earnings per share (EPS) of $2.61.
Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $6.89 billion, down 9.5% year over year. Contrarily, the reported figure surpassed the analysts’ expectation of $6.71 billion by 2.7%.
The consolidated pre-tax profit margin was 11.6% in the quarter, down from 14.6% a year ago.
Segment Details of D.R. Horton
Homebuilding revenues of $6.53 billion decreased 9% from the prior-year quarter. Home sales were $6.51 billion, down 8.9% year over year. Home closings were down 6.5% from the prior-year quarter to 17,818 homes.
Net sales orders improved 2.6% year over year to 18,300 units. The value of net orders inched up 0.1% year over year to $6.66 billion. The cancellation rate (on gross sales orders) was 18%, at par year over year.
As of Dec. 31, 2025, the sales order backlog of homes was 11,376, up 3.4% year over year. Moreover, the value of the backlog was up 0.3% from the prior-year period to $4.31 billion.
Financial Services’ revenues grew 1.3% from the year-ago level to $184.6 million.
Forestar contributed $273 million to total quarterly revenues with 1,944 lots sold. In the year-ago quarter, this segment contributed $250.4 million to total revenues on 2,333 lots sold.
The Rental business generated revenues of $109.5 million for the quarter, down from $217.8 million a year ago.
Financial Details of D.R. Horton
D.R. Horton’s cash, cash equivalents and restricted cash totaled $2.55 billion as of Dec. 31, 2025, compared with $3.03 billion at the end of fiscal 2025. Total liquidity as of the fiscal first quarter was $6.6 billion.
At the end of the first quarter of fiscal 2026, the company had 30,400 homes in inventory, of which 20,000 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 590,500 lots at the end of the fiscal first quarter. Of these, 25% were owned and 75% were controlled through land and lot purchase contracts.
At the end of the fiscal first quarter, the debt-to-total capital ratio was 18.8%. The trailing 12-month return on equity was 13.7%.
During the fiscal quarter, D.R. Horton repurchased 4.4 million shares of common stock for $669.7 million. As of Dec. 31, 2025, the company's remaining stock repurchase authorization was $2.6 billion.
D.R. Horton Reiterates 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 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 review.
The consensus estimate has shifted -9.5% 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 a D. Charting a somewhat similar path, the stock has a grade of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. 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. It's no surprise D.R. Horton has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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D.R. Horton, Inc. (DHI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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