On Tuesday before 11:40 a.m. Eastern Time, shares of significant U.S. homebuilder D.R. Horton (DHI) experienced an increase of 14.4%, primarily due to their impressive performance in their third-quarter earnings release.
Experts predict a net income of approximately $2.90 per share from Horton’s fiscal third quarter on revenues of around $8.8 billion. However, the company actually reported earnings of $3.36 per share, with total sales amounting to $9.2 billion.
D.R. Horton Q3 earnings
The news wasn’t entirely positive. D.R. Horton surpassed earnings expectations, but their net profit of $3.36 per share dropped by a significant 18% compared to Q3 of 2024. Even more concerning is that the overall net profit declined by a staggering 24%. However, sales only decreased by 7%.
From a closer look, here’s what this implies for investors: Firstly, since profits dropped at a faster rate compared to revenues, it indicates that D.R. Horton’s profit margin shrunk during the quarter. On the positive side, however, while earnings per share decreased, not as much as net profit. This could suggest that D.R. Horton might have invested in share buybacks, thereby focusing more profits on the remaining shares.
Confirming this hunch, Horton noted that its share count fell by 9% year over year.
Is D.R. Horton stock a buy?
Despite the current circumstances, the homebuilding sector isn’t thriving at the moment. As stated by Executive Chairman David Auld, “the demand for new homes is still being affected by persistent affordability issues and cautious consumer attitudes,” leading Horton to reduce prices and provide incentives to stimulate sales and clear inventory.
The projected sales range for management this year, which is between $33.7 billion and $34.2 billion, falls slightly short of analyst predictions. This could suggest that the current situation may not be improving, or it might just mean that the improvement hasn’t happened yet. However, with a P/E ratio of merely 10 times and offering a 1.2% dividend, D.R. Horton seems reasonably priced to me.
I’d lean more toward buy than sell on this one.
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2025-07-22 19:21