D.R. Horton (DHI Quick QuoteDHI - Free Report) delivered second-quarter fiscal 2026 results with earnings beating the Zacks Consensus Estimate but revenues missing the same. The quarter was marked by an 11% jump in net sales orders and progress in tightening finished inventory, even as affordability constraints kept incentives elevated.

Shares of this Arlington, TX-based homebuilder gained 2.4% following the earnings release on Tuesday.

DHI Margins Stayed Resilient Despite Earnings Decline

The company’s earnings of $2.24 per share were down 13.2% from $2.58 a year ago but 4.2% above the Zacks Consensus Estimate of $2.15. Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $7.56 billion, down 2.3% year over year and 1.3% below the consensus mark of $7.66 billion.

Net income attributable to D.R. Horton fell 20% year over year to $647.9 million. Consolidated income before taxes was $867.4 million on $7.6 billion of revenues, producing a pre-tax profit margin of 11.5% for the quarter.

Management highlighted that the pre-tax profit margin finished above the high end of its guidance range. The company also noted that the fiscal second-quarter consolidated pre-tax profit margin and home sales gross margin included a 40-basis-point benefit tied to a favorable litigation outcome and lower warranty costs. Against a backdrop of affordability pressure and cautious consumer sentiment, the ability to remain within its expected profitability range was a key takeaway from the release.

D.R. Horton’s Core Homebuilding Trends Improved

Homebuilding revenue declined 2% year over year to $7.1 billion, while homes closed increased 1% to 19,486. Home sales revenues totaled $7.0 billion, supported by steady closing volumes across the footprint.

Demand indicators were firmer. Net sales orders rose 11% to 24,992 homes, with an order value of $9.2 billion. The cancelation rate was 16%, which was in line with the prior-year quarter. Management said incentives are expected to remain elevated in fiscal 2026, with levels dependent on demand, mortgage rates and broader market conditions. Alongside the order improvement, the company emphasized its actions to reduce unsold completed homes by 35% from a year ago, reflecting tighter execution around inventory and sales pace.

The quarter also showed contributions outside homebuilding. Rental operations generated $211.8 million of revenues (down from $236.6 million a year ago) from the sale of 566 single-family rental homes and 216 multifamily rental units, producing pre-tax income of $12.3 million. Forestar posted $374.3 million of revenues (up from $351 million a year ago) on 2,938 lots sold, with pre-tax income of $43.9 million. Financial Services delivered $192.8 million of revenues (down from $212.9 million a year ago) and $51.7 million of pre-tax income, highlighting the earnings power of the captive mortgage and related offerings.

D.R. Horton, Inc. Price, Consensus and EPS Surprise

D.R. Horton, Inc. price-consensus-eps-surprise-chart | D.R. Horton, Inc. Quote

DHI Kept Returning Cash While Maintaining Liquidity

D.R. Horton continued to prioritize shareholder returns during the quarter. The company repurchased 6 million shares for $903.6 million and paid $129.7 million in cash dividends. Common shares outstanding as of March 31, 2026, were 284.9 million, down 8% from a year ago, and remaining repurchase authorization totaled $1.7 billion.

D.R. Horton’s cash, cash equivalents and restricted cash totaled $1.97 billion as of March 31, 2026, compared with $3.03 billion at the end of fiscal 2025.

Yet, the balance sheet reflected solid liquidity. Total liquidity was $6 billion at the end of the quarter, and the debt-to-total capital ratio was 21.7%. For the first six months of fiscal 2026, cash provided by operations was $441.5 million, up from $210.5 million a year ago. Management also noted it has $600 million of homebuilding senior notes maturing within the next 12 months.

Profitability metrics over the trailing 12 months remained positive. Return on equity was 13.2% and return on assets was 8.9%, underscoring that the business is still generating meaningful returns even with lower year-over-year earnings.

D.R. Horton Updated Fiscal 2026 Targets and Operating Posture

D.R. Horton updated fiscal 2026 consolidated revenue guidance to $33.5-$34.5 billion compared with the prior expectation of $33.5-$35 billion. This compares with $34.25 billion in fiscal 2025.

The company now expects homebuilding closings of 86,000-87,500 homes compared with the earlier guidance of 86,000-88,000. This compares with 84,863 in fiscal 2025. The company reiterated several framework assumptions, including an income tax rate of about 24.5% and an operating cash flow of at least $3 billion.

Capital allocation targets were reaffirmed as well. Management continues to expect share repurchases of approximately $2.5 billion and dividend payments of approximately $500 million in fiscal 2026. Operationally, the company closed the quarter with 38,200 homes in inventory, of which 22,900 were unsold. Unsold completed homes totaled 5,500, including 800 that had been completed for more than six months, a metric investors often watch to gauge the pace of absorption and the potential need for additional incentives.

On the lot position, D.R. Horton reported 575,300 total lots owned and controlled as of March 31, 2026, with 23% owned and 77% controlled through purchase contracts. The company also noted that lots controlled included approximately 41,000 lots owned or controlled by Forestar, supporting its strategy of maintaining a flexible, capital-light pipeline in a shifting demand environment.

DHI’s Zacks Rank & Recent Homebuilding Releases

D.R. Horton currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank stocks here.

KB Home (KBH Quick QuoteKBH - Free Report) reported first-quarter fiscal 2026 results. The company’s quarterly earnings came in line with the Zacks Consensus Estimate, while total revenues missed the same. Both metrics decreased on a year-over-year basis.

For the second quarter of fiscal 2026, KB Home is expecting housing revenues to be in the $1.05-$1.15 billion band, down from $1.52 billion reported in the year-ago period. It expects deliveries to be in the range of 2,250-2,450 homes compared with 3,120 homes delivered in the year-ago period.

Lennar Corporation (LEN Quick QuoteLEN - Free Report) reported tepid results for the first quarter of fiscal 2026, wherein its adjusted earnings and total revenues missed the Zacks Consensus Estimate and declined year over year.

For the fiscal second quarter, Lennar expects deliveries to be in the range of 20,000-21,000 homes compared with 20,131 homes delivered in the year-ago period. Lennar expects the ASP of the delivered homes to be in the range of $370,000-$375,000, down from $389,000 reported a year ago.

Meritage Homes Corporation (MTH Quick QuoteMTH - Free Report) is scheduled to report its first-quarter 2026 results on April 22, 2026. Earnings for the to-be-reported quarter are expected to decline 40.2% on 11% lower revenues.