UBS analyst John Lovallo has increased the price target for D.R. Horton (DHI, Financial) from $176 to $187, maintaining a Buy rating on the company's shares. This decision is based on the robust performance D.R. Horton exhibited during its third-quarter financial results, according to Lovallo's research note.
DHI Key Business Developments
Release Date: July 22, 2025
- Earnings per Share (EPS): $3.36 per diluted share.
- Consolidated Revenue: $9.2 billion.
- Pretax Income: $1.4 billion.
- Pretax Profit Margin: 14.7%.
- Net Income: $1 billion.
- Home Sales Revenue: $8.6 billion on 23,160 homes closed.
- Average Closing Price: $369,600, down 1% sequentially and 3% year over year.
- Gross Margin on Home Sales: 21.8%.
- Operating Cash Flow: $2.9 billion generated over the past 12 months.
- Return on Inventory: 22.1% for homebuilding pretax.
- Return on Equity: 16.1%.
- Return on Assets: 11.1%.
- Net Sales Orders: 23,071 homes, flat with the prior year quarter.
- Order Value: Decreased 3% to $8.4 billion.
- Cancellation Rate: 17%.
- SG&A Expenses: Increased 2% from last year; 7.8% of revenues.
- Community Count: Up 12% year over year.
- Homes Started: 24,700 homes in the June quarter, up 24% sequentially.
- Rental Operations Revenue: $381 million with $55 million pretax income.
- Forestar Revenue: $391 million on 3,605 lots sold.
- Financial Services Pretax Income: $81 million on $228 million of revenues.
- Liquidity: $5.5 billion, consisting of $2.6 billion cash and $2.9 billion credit capacity.
- Debt: $7.2 billion total debt.
- Stockholders' Equity: $24.1 billion; book value per share $80.46.
- Dividends: $0.40 per share, totaling $122 million.
- Share Repurchases: 9.7 million shares for $1.2 billion.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- D.R. Horton Inc (DHI, Financial) reported solid financial results for the third quarter, with earnings of $3.36 per diluted share.
- The company achieved a home sales gross margin of 21.8%, which was above their guidance range.
- D.R. Horton Inc (DHI) generated $2.9 billion of cash from operations over the past 12 months and returned $4.6 billion to shareholders through repurchases and dividends.
- The company's return on assets ranks in the top 15% of all S&P 500 companies for the past 3-, 5-, and 10-year periods.
- D.R. Horton Inc (DHI) has a strong balance sheet with low leverage and healthy liquidity, providing significant financial flexibility.
Negative Points
- Net income for the quarter was $1 billion, down from the prior year quarter.
- The average closing price for homes was $369,600, down 1% sequentially and down 3% year over year.
- Net sales orders were flat with the prior year quarter, and order value decreased by 3%.
- The cancellation rate for the quarter was 17%, up from 16% sequentially.
- Homebuilding SG&A expenses increased by 2% from last year, and SG&A expense as a percentage of revenues was up 70 basis points.
