REVENUEBeat +3.5%
EPSMiss -10.7%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueConsolidated revenues (three months ended September 30, 2026) | $9.37B | $9.05B | ▲ Beat +3.5% |
| EPS(GAAP diluted) | $2.67 | $2.99 | ▼ Miss -10.7% |
Highlights & what matters
- Revenue beat, EPS missed: consolidated revenues of $9.37 billion against a $9.05 billion estimate, but diluted EPS of $2.67 against $2.99, down 12% year over year as net income fell 18% to $741.8 million.
- The initial fiscal 2027 guide points lower: consolidated revenues of $30.0-32.0 billion against $33.0 billion in fiscal 2026, and 79,000-84,000 homes closed against 84,202, with management expecting incentives to remain elevated.
- Demand weakened into year end: net sales orders fell 7% to 18,619 homes and 9% in value to $6.6 billion, and the cancellation rate rose to 23% from 20%.
- Capital return stays heavy: 9.4 million shares repurchased for $1.4 billion in the quarter, the dividend raised 11% to $0.50, and fiscal 2027 plans call for about $3.0 billion of buybacks and $500 million of dividends.
- The one thing that matters: the revenue beat came from closing more homes than orders replaced, and orders fell faster in value than in units. With incentives staying elevated and the fiscal 2027 guide below fiscal 2026 on both revenue and closings, the margin pressure in this quarter looks set to continue.
Key metrics
| Metric | Reported | Prior year | Change |
|---|---|---|---|
| Net income attributable to D.R. Horton | $741.8 million | — | -18% |
| Homebuilding pre-tax income | $891.0 million | — | -11% |
| Net sales orders (homes) | 18,619 | — | -7% |
| Net sales orders (value) | $6.6 billion | — | -9% |
| Cancellation rate | 23% | 20% | — |
| Rental inventory impairment charges | $91.4 million | — | — |
Guidance changes
| Item | New guidance | Prior guidance |
|---|---|---|
| Fiscal 2027 consolidated revenues | $30.0 billion to $32.0 billion | — |
| Fiscal 2027 homes closed by homebuilding operations | 79,000 homes to 84,000 homes | — |
| Fiscal 2027 consolidated cash flow provided by operations | approximately $3.5 billion | — |
| Fiscal 2027 share repurchases | approximately $3.0 billion | — |
| Fiscal 2027 dividend payments | approximately $500 million | — |
Quality of earnings
- A one-time charge makes the reported quarter look worse than the core. Results include $91.4 million of inventory impairment charges on nine multi-family rental projects, which turned the rental segment to a $25.3 million pre-tax loss from $80.5 million of pre-tax income a year earlier.
- Buybacks cushion per-share results. Diluted weighted shares fell to 277.9 million from 297.4 million, so EPS fell 12% while net income attributable to D.R. Horton fell 18%.
- Cash backs the earnings. Fiscal 2026 operating cash flow of $3.5 billion ran ahead of $2.9 billion of net income attributable to D.R. Horton, helped by construction-in-progress and finished-home inventory falling $146.3 million.
Gotchas & watch items
- Backlog is stronger than the order decline implies: the sales order backlog stood at 11,714 homes worth $4.5 billion at September 30, 2026, against 10,785 homes worth $4.1 billion a year earlier.
- Impairments are spreading beyond rental: total inventory and land option charges were $134.3 million in the quarter against $57.3 million a year earlier, including $29.3 million in homebuilding.
- Forestar is slowing: lot-development pre-tax income was $78.6 million in the quarter against $113.1 million a year earlier, on revenues of $580.8 million against $670.5 million.
- The land book is shrinking: owned lots fell to 130,500 from 147,000 and total owned and controlled lots to 570,600 from 591,900, while 8,800 unsold homes sit completed, including 600 finished more than six months ago.