D.R. Horton, Inc. DHI reported dismal second-quarter fiscal 2025 (ended March 31, 2025) results, with earnings and total revenues missing Zacks Consensus Estimate and 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. Such a weak market scenario resulted in lower net sales orders. 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.
Shares of this Arlington, TX-based homebuilder lost 3.9% following the earnings release on Thursday.
DHI’s Earnings, Revenues & Margin Discussion
DHI reported adjusted earnings of $2.58 per share, which missed the Zacks Consensus Estimate of $2.66 by 3%. In the year-ago quarter, the company reported adjusted earnings per share (EPS) of $3.52. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $7.73 billion, down 15% year over year. The reported figure also missed the analysts’ expectation of $8.09 billion by 4.4%.
D.R. Horton, Inc. Price, Consensus and EPS Surprise
D.R. Horton, Inc. Price, Consensus and EPS Surprise
D.R. Horton, Inc. price-consensus-eps-surprise-chart | D.R. Horton, Inc. Quote
The consolidated pre-tax profit margin was 13.8% in the quarter under review, down from 16.8% a year ago.
Segment Details of D.R. Horton
Homebuilding revenues of $7.2 billion decreased 15% from the prior-year quarter. Home sales were $7.18 billion (below our projection of $7.54 billion), down 15.2% year over year. Home closings were down 15% from the prior-year quarter to 19,276 homes.
Net sales orders were down 15% year over year to 22,437 homes (down from our projection of 25,406 units). The value of net orders decreased 17% year over year to $8.4 billion from $10.1 billion. The cancellation rate (on gross sales orders) was 16%, a decrease from 15% a year ago.
The sales order backlog of homes at the end of the fiscal second quarter was 14,164 homes, down 21% year over year. Moreover, the value of the backlog was down 22% from the prior-year period to $5.5 billion.
Financial Services’ revenues decreased 5.6% from the year-ago level to $212.9 million (down from our expectation of $225.9 million).
Forestar contributed $351 million (down from our projection of $382.8 million) to total quarterly revenues with 3,411 lots sold, indicating growth from $333.8 million in revenues generated a year ago on 3,289 lots sold.
The Rental business generated revenues of $144.2 million for the quarter (we had projected $290 million), down from $301.3 million a year ago.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $2.52 billion as of March 31, 2025, compared with $4.54 billion at the end of fiscal 2024. It had $3.3 billion of available capacity on the revolving credit facility as of March 31. Total liquidity was $5.8 billion.
At the end of March 2025, DHI had 36,900 homes in inventory, of which 23,500 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 613,100 lots at the end of the fiscal second quarter. Of these, 25% were owned and 75% were controlled through land and lot purchase contracts.
At the end of the fiscal second quarter, debt totaled $6.5 billion, with a debt-to-total capital of 21.1%. The trailing 12-month return on equity was 17.4%.
D.R. Horton repurchased 16.5 million shares of common stock for $2.4 billion during the first six months of fiscal 2025. As of March 31, 2025, the company's remaining stock repurchase authorization was $1.2 billion. In April 2025, its board of directors authorized the repurchase of up to $5.0 billion of its common stock, replacing the previous authorization.
DHI’s Fiscal 2025 Guidance Updated
D.R. Horton now expects consolidated revenues to be in the range of $33.3-$34.8 billion, down from the previously expected range of $36-$37.5 billion. This compares with $36.8 billion in fiscal 2024.
Homes closed are anticipated to be within 85,000-87,000 homes, down from the previously expected range of 90,000-92,000 units. This compares with 89,690 homes closed in fiscal 2024
The cash flow provided by operations is expected to be more than $3 billion. The income tax rate is expected to be 24%.
DHI’s Zacks Rank & Recent Peer Releases
D.R. Horton currently carries a Zacks Rank #3 (Hold).
KB Home KBH reported lackluster fiscal first-quarter 2025 results. The quarter’s earnings and total revenues missed the Zacks Consensus Estimate and tumbled year over year.
The quarter’s result reflects the softness in the housing market as homebuyers are still navigating through affordability concerns due to high mortgage rates. Besides, the ongoing macroeconomic uncertainties and other regulatory changes in the country are adding to the instability of the housing market. Owing to these market uncertainties and a lower net order level at the end of the quarter, KB Home lowered its fiscal 2025 guidance.
Lennar Corporation LEN reported first-quarter fiscal 2025 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top line increased but the bottom line declined.
The quarter’s performance was impacted by a challenging macroeconomic environment. Although demand remained strong, higher interest rates, inflation and weak consumer confidence made homeownership less accessible. A limited supply of affordable homes added to the difficulties, leading to a decline in the company's average sales price. Moving forward to fiscal 2025, to counter the market uncertainties, Lennar aims to focus on its volume-based strategy to drive sales and implement an asset-light, land-light business model.
A Stock to Consider
EMCOR Group, Inc. EME currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company delivered a trailing four-quarter earnings surprise of 29%, on average. The stock has trended down 15.7% year to date. The Zacks Consensus Estimate for EMCOR’s 2025 sales and EPS implies an increase of 12.8% and 8.6%, respectively, from a year ago.
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