D.R. Horton’s (NYSE:DHI) Q2 Sales Top Estimates, Stock Soars

Homebuilder D.R. Horton (NYSE:DHI) beat Wall Street’s revenue expectations in Q2 CY2025, but sales fell by 7.4% year on year to $9.23 billion. The company expects the full year’s revenue to be around $33.95 billion, close to analysts’ estimates. Its GAAP profit of $3.36 per share was 16.6% above analysts’ consensus estimates.

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David Auld, Executive Chairman, said, “The D.R. Horton team delivered a strong third quarter, highlighted by earnings per diluted share of $3.36. Consolidated pre-tax income for the quarter was $1.4 billion on revenues of $9.2 billion, with a pre-tax profit margin of 14.7%. We leveraged our operational results and strong balance sheet to return $1.3 billion to shareholders through share repurchases and dividends during the quarter, and we have reduced our outstanding share count by 9% from a year ago."

Company Overview

One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE:DHI) builds a variety of new construction homes across multiple markets.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Thankfully, D.R. Horton’s 12.8% annualized revenue growth over the last five years was excellent. Its growth beat the average industrials company and shows its offerings resonate with customers.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. D.R. Horton’s recent performance shows its demand has slowed significantly as its revenue was flat over the last two years.

D.R. Horton also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. D.R. Horton’s backlog reached $5.3 billion in the latest quarter and averaged 17.1% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, D.R. Horton’s revenue fell by 7.4% year on year to $9.23 billion but beat Wall Street’s estimates by 5%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection doesn't excite us and implies its newer products and services will not lead to better top-line performance yet.

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Operating Margin

D.R. Horton has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 17.8%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, D.R. Horton’s operating margin decreased by 3.7 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q2, D.R. Horton generated an operating margin profit margin of 13.7%, down 3.5 percentage points year on year. Since D.R. Horton’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

D.R. Horton’s EPS grew at an astounding 17.7% compounded annual growth rate over the last five years, higher than its 12.8% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into D.R. Horton’s earnings quality to better understand the drivers of its performance. A five-year view shows that D.R. Horton has repurchased its stock, shrinking its share count by 17.1%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For D.R. Horton, its two-year annual EPS declines of 5.8% mark a reversal from its (seemingly) healthy five-year trend. We hope D.R. Horton can return to earnings growth in the future.

In Q2, D.R. Horton reported EPS at $3.36, down from $4.10 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects D.R. Horton’s full-year EPS of $12.48 to shrink by 6.3%.

Key Takeaways from D.R. Horton’s Q2 Results

We were impressed by how significantly D.R. Horton blew past analysts’ revenue, EPS, and EBITDA expectations this quarter. On the other hand, its backlog missed. Still, this print had some key positives. The stock traded up 7% to $140.37 immediately following the results.

Is D.R. Horton an attractive investment opportunity at the current price? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.