DHI Stock Surges 14.78% on Robust Q3 Earnings Despite Decline in Profitability Metrics

D.R. Horton's Q3 earnings report exceeded expectations with $3.36 per share earnings and $9.2 billion in revenues, but profitability metrics declined. The company faces challenges due to affordability issues and has adjusted by lowering prices and offering incentives. Despite this, D.R. Horton's financial strength is underscored by a strong Altman Z-score, and its dividend yield is near a two-year high. The stock price increased 14.78% after the report.

D.R. Horton Inc. (NYSE: DHI), a leading homebuilder, reported its third-quarter fiscal 2025 earnings, which exceeded market expectations. The company reported earnings per diluted share of $3.36, with a pretax income of $1.4 billion and revenues of $9.2 billion [1].

However, profitability metrics declined compared to the same quarter last year. The company's net income per diluted share decreased 18% to $3.36, and net income attributable to D.R. Horton decreased 24% to $1.0 billion [2]. This decline was attributed to a 7% decrease in consolidated revenues and a 4% decrease in homes closed.

The company's strong liquidity and balance sheet position were highlighted by a net cash provided by operations of $949.1 million and a consolidated cash balance of $2.6 billion. The debt to total capital ratio was 23.2%, indicating a relatively low leverage position [2].

D.R. Horton faces significant challenges due to ongoing affordability constraints and cautious consumer sentiment. The company has responded by lowering prices and offering incentives to boost sales. Despite these challenges, the company's Altman Z-score remains strong, indicating a low risk of bankruptcy [2].

The stock price of D.R. Horton increased 14.78% after the earnings report, reaching $150.14. Wall Street analysts have set varied price targets for the stock, with a consensus one-year target of $147.27, ranging from a high of $180.00 to a low of $105.00 [1]. The average recommendation from 22 brokerage firms is a "Hold," suggesting a cautious stance among analysts [1].

References:
[1] https://www.gurufocus.com/news/2994768/dr-horton-dhi-posts-strong-q3-earnings-with-increased-home-closures
[2] https://investor.drhorton.com/news-and-events/press-releases/2025/07-22-2025-110041577