Episode
D.R. Horton Stock: America’s #1 Homebuilder Beat Earnings — So Why We Say HOLD
- Published
- Jul 26, 2026
- Duration seconds
- 864
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Summary
D.R. Horton (DHI) Q3 FY2026 — D.R. Horton (DHI), America's largest homebuilder by volume, reported fiscal Q3 2026 (quarter ended June 30, 2026): diluted EPS of $3.20 beat the ~$3.07 estimate but FELL 5% year-over-year, with net income down 12% to $904.9M on flat revenue of $9.2B. Homes closed rose 4% to 23,983 (high end of guidance), but home sales gross margin slipped to 20.7% (off the ~24% peak) as the company leaned on mortgage-rate buydowns and incentives. Net sales orders were flat at 23,084 homes ($8.4B) and the cancellation rate jumped to 20% from 17% — a demand-softening tell. The balance sheet stays a fortress: 23% debt-to-capital, $6.1B liquidity, book value/share up 5% to $84.85, and $742.8M returned in Q3 ($615.7M buybacks + $127.1M dividends), shrinking shares ~6%. Management trimmed FY26 revenue guidance to $32.5-33.0B (~84,000 homes) and reaffirmed ~$2.5B of buybacks. The stock (~$147) is down ~20% from its $185 high, near the 52-week low. At ~14x trailing earnings it looks cheap, but our mid-cycle DCF and ~1.6x-book cross-check land fair value near $135 — modestly below the price on earnings that are past their peak. Our call: HOLD, 3/5. The Street also rates it Hold (~$164 avg target), so we're aligned on the verdict, a shade more cautious on value. D.R. Horton (DHI) is America's Builder — the largest US homebuilder by volume since 2002, roughly 85,000 homes a year across 126 markets in 36 states. Fiscal Q3 2026 (ended June 30, 2026) was a beat that isn't what it looks like: diluted EPS of $3.20 topped the ~$3.07 estimate but fell 5% YoY, net income dropped 12% to $904.9M, and revenue was flat at $9.2B. Homes closed rose 4% to 23,983 (high end of guidance) — but the company is buying that volume with price: home sales gross margin fell to 20.7% (from t…