D.R. Horton 2025 Q3 Earnings Misses Targets as Net Income Falls 24%

D.R. Horton reported its fiscal 2025 Q3 earnings on Jul 22nd, 2025. D.R. Horton underperformed expectations, with its revenue and net income declining compared to the previous year. Despite the challenges, the company has set guidance for the next quarter in line with market forecasts. The revenue target for the full fiscal year 2025 is approximately $33.7 billion to $34.2 billion, indicating the company's cautious optimism moving forward.

Revenue
D.R. Horton experienced a 7.4% decline in its total revenue for Q3 2025, down to $9.23 billion from $9.97 billion in Q3 2024. Breaking it down, home sales were the largest contributor with $8.56 billion. The land and lot sales, along with other sources, added $56.20 million, while rental property sales brought in $380.70 million. Financial services contributed $227.80 million, while inventory and land option charges remained at zero.

Earnings/Net Income
The company's earnings per share (EPS) fell by 18.2% to $3.37 in Q3 2025 from $4.12 in Q3 2024. Additionally, net income decreased by 24.4%, reaching $1.03 billion compared to $1.37 billion in the same quarter of the previous year. The decline indicates a challenging quarter for D.R. Horton.

Price Action
The stock price of D.R. Horton has climbed 6.13% during the latest trading day, has surged 18.24% during the most recent full trading week, and has surged 26.57% month-to-date.

Post-Earnings Price Action Review
The strategy of buying D.R. Horton shares when earnings exceed expectations and holding them for 30 days has proven effective, yielding a 103.42% return, far surpassing the benchmark return of 88.32%. This strategy boasts a Sharpe ratio of 0.43, denoting a favorable risk-adjusted return. Additionally, the strategy's maximum drawdown was 0%, demonstrating minimal risk. This approach underscores the potential benefits of capitalizing on positive earnings surprises, reflecting investor confidence and market momentum. By mitigating risks and optimizing returns, this strategy effectively leverages D.R. Horton's market performance.

CEO Commentary
Paul J. Romanowski, President and CEO, stated, "The D.R. Horton team exceeded our expectations and delivered solid results for the third quarter." He highlighted the challenges posed by "ongoing affordability constraints and cautious consumer sentiment," yet emphasized discipline in balancing pace and price to maximize returns. Romanowski noted that the company is well-positioned, offering "quality homes at affordable price points," and expressed a "positive outlook for the housing market over the medium to long term." He underscored the strategic focus on capital efficiency, generating substantial cash flows, and delivering compelling returns to shareholders.

Guidance
D.R. Horton expects consolidated revenues in the range of $9.1 billion to $9.6 billion for Q4 2025, with homes closed projected to be between 23,500 and 24,000. The company anticipates a home sales gross margin for Q4 of 21% to 21.5% and a consolidated pretax profit margin between 13.6% and 14.1%. For the full fiscal year 2025, the revenue target is approximately $33.7 billion to $34.2 billion, with homes closed expected to be in the range of 85,000 to 85,500.

Additional News
D.R. Horton has recently announced its dual listing on the NYSE Texas, reflecting its commitment to expanding its market presence and increasing shareholder accessibility. Additionally, the company declared a quarterly dividend of $0.40 per share, reinforcing its strategy to deliver returns to shareholders amidst a challenging economic environment. In another development, D.R. Horton revealed the pricing of $500 million of 4.850% senior notes due in 2030, aiming to enhance its financial flexibility and support strategic initiatives. These actions underscore the company's proactive approach to navigating the current market landscape and ensuring long-term growth.