D.R. Horton Reports Earnings Per Share of $2.67 as Orders Fall 7%
Key Facts
D.R. Horton reported diluted earnings per share of $2.67 in the fourth quarter of fiscal 2026, which ended September 30, down 12% year over year. Net income attributable to the company was $741.8 million, a decline of 18%, according to the company’s statement issued on October 29. Adjusted earnings per share came in below analysts’ average estimate of $3.01, according to an Investing.com report carrying Reuters content. Revenue of $9.4 billion, by contrast, exceeded analysts’ estimate of $9.07 billion. The results highlight a gap between revenue beating estimates and declines in earnings and indicators of demand for new homes.
Pretax income was $1 billion, while the pretax profit margin was 10.8%, according to the company’s statement. Fourth-quarter results included $91.4 million in inventory impairment charges within cost of sales in the rental segment. The charge relates to the rental business, while homebuilding figures showed declines in revenue, closings and new orders. The charge was therefore one component of quarterly results alongside weaker housing activity indicators. For fiscal 2026, net income attributable to the company fell to $2.9 billion, or $10.11 per diluted share, down 19% and 13%, respectively, from the prior year.
Homebuilding revenue fell 2% to $8.4 billion in the fourth quarter, and the number of homes closed declined 2% to 22,915. New orders fell 7% to 18,619 homes, and their value declined 9% to $6.6 billion. The cancellation rate rose to 23% of gross orders, compared with 20% in the same quarter a year earlier. The figures show declines extending from new orders to closings, alongside an increase in cancellations. In the third quarter, homebuilding revenue had risen 1% to $8.7 billion, and the company closed 23,983 homes, up 4%, while the cancellation rate was 20%, compared with 17% a year earlier.
Executive Chairman David Auld said housing market conditions became more challenging in the fourth quarter, as persistently high mortgage rates, affordability challenges and consumer caution continued to weigh on demand for new homes. In its third-quarter results, the company had forecast that sales incentives would remain elevated in the fourth quarter, with their level determined by demand, mortgage rates and other market conditions. The company now expects incentives to remain elevated in fiscal 2027, with their magnitude depending on market conditions during the year. This means incentives will remain part of the company’s response to the demand pressures it described, as housing affordability challenges persist. The company did not specify a figure for expected incentive levels in the reported information.
D.R. Horton expects consolidated revenue of between $30 billion and $32 billion in fiscal 2027, closings of between 79,000 and 84,000 homes, and operating cash flow of about $3.5 billion. The outlook reflects the level of activity the company is targeting for the coming fiscal year, as it expects incentives to remain elevated. The company also announced an 11% increase in its quarterly cash dividend to $0.50 per share. The dividend is scheduled to be paid on November 19, 2026, to shareholders of record on November 12. These dates follow the earnings announcement on October 29.
The company’s shares fell 4.2% after the results were announced, according to an Investing.com report published on October 29. The shares closed at $143 on October 28, according to EL7 data. The post-announcement move combines earnings per share below analysts’ consensus with a decline in new orders and a higher cancellation rate. At the same time, revenue exceeded analysts’ estimates, while results included inventory charges in the rental segment. The fiscal 2027 revenue, closings and cash flow outlook remains an indicator of the activity the company is targeting for the coming year, alongside expectations for demand and the market conditions that will determine incentives.