DHI: Bearish Signals for D.R. Horton, Inc.

D.R. Horton is the largest homebuilding company in the United States, constructing and selling homes in 125 markets across 36 states. The company's core business is homebuilding, offering a broad range of homes for entry-level, move-up, active adult, and luxury buyers, including single-family detached and attached homes like townhomes. D.R. Horton also operates rental segments consisting of single-family and multi-family rental operations. The company differentiates itself through its national, regional, and local scale, providing access to capital, volume discounts, and enhanced leverage. It also maintains a decentralized homebuilding operation, allowing local managers to make operational decisions, while centralizing key risk elements and initiatives through regional and corporate offices, including Forestar, its majority-owned residential lot development company, and 'DHI Mortgage', its wholly-owned subsidiary.

No relevant news was found for this stock today.

DHI's technical outlook is bearish. The recent price action shows a clear downtrend, with the price declining from a high of $184.04 on September 8th to $145.48 as of November 4th. The price is now below its 21-day EMA of $155.56 and significantly below the 50-day SMA of $164.70 and 200-day SMA of $140.39, confirming the bearish trend. Momentum indicators are also weak. The MACD is negative and trending further downward, with the MACD line well below the signal line. The RSI is at 31.64, indicating oversold conditions, which could lead to a short-term bounce, but the overall trend remains negative. The stochastic oscillator is also very low, indicating oversold conditions. The Bollinger Bands show the price is trading near the lower band, suggesting continued downward pressure. Given these factors, DHI is likely to continue its downtrend over the next 1–3 months, with limited upside potential.

D.R. Horton's MD&A reveals a softening housing market impacting financial performance. Consolidated revenues decreased 7% to '$9.2 billion' for the three months ended June 30, 2025. The gross profit margin for home sales decreased to '21.8%' compared to '24.0%' in the prior year. This contraction is attributed to increasing average costs of homes closed coupled with decreasing average selling prices. For the nine months ended June 30, 2025, net cash provided by operations was '$949.1 million' compared to '$228.2 million' in the prior year period, reflecting a significant increase in cash flow from operations, primarily driven by the homebuilding segment. Management acknowledges that 'new home demand continued to be impacted by uncertainty among potential homebuyers due to ongoing affordability constraints and cautious consumer sentiment.' They also anticipate maintaining an 'elevated level of incentives' and may increase them further, depending on market conditions and changes in mortgage interest rates, suggesting a need to stimulate demand in a challenging environment. Overall, the MD&A paints a picture of a company navigating a more difficult market, with declining revenues and margins, but with strong cash flow and a proactive approach to managing inventory and incentives.

D.R. Horton's Q3 2025 earnings call presents a moderately bullish outlook, driven by exceeding expectations despite a challenging market. Paul Romanowski stated, 'The D.R. Horton team exceeded our expectations and delivered solid results for the third quarter.' Earnings reached $3.36 per diluted share, with a consolidated pre-tax income of $1.4 billion. Net sales orders were flat year-over-year but increased sequentially by 3%. The company closed 23,160 homes with a home sales gross margin of 21.8%, both exceeding guidance. Looking ahead, the company anticipates consolidated revenues between $9.1 billion and $9.6 billion for Q4, with home closings projected between 23,500 and 24,000. They expect the home sales gross margin to be in the range of 21% to 21.5%. Full-year consolidated revenues are now expected to be between $33.7 billion and $34.2 billion, with 85,000 to 85,500 home closings. While incentives are expected to increase in Q4, potentially impacting gross margins, the company plans to repurchase $4.2 billion to $4.4 billion of common stock in fiscal 2025, reflecting confidence in their financial position. The company is also seeing a positive trend in smaller markets with less public builder competition.

DHI's financial performance presents a somewhat positive picture, though with some caveats. Revenue has shown a general uptrend, increasing from $7.613B in Q1 2025 to $9.678B in Q4 2025. Gross profit ratio, however, has fluctuated, starting at 0.2509 in Q1 2025, peaking at 0.2651 in Q3 2024, and settling at 0.2167 in Q4 2025, indicating some margin compression. The operating cash flow is positive at $738.6M in the most recent quarter with available data (Q3 2025), contrasting with a negative operating cash flow of -$436.2M in Q2 2025. Total debt has increased from $5.150B in Q1 2025 to $5.966B in Q4 2025. While revenue is growing, the fluctuating gross profit ratio and increasing debt should be monitored. The company's ability to generate positive operating cash flow in the latest reported quarter is a positive sign, but its consistency needs to be confirmed in subsequent periods.

The company demonstrates a moderately bullish profile, characterized by solid revenue growth and improving profitability. Revenue has consistently increased, indicating strong market demand. The gross margin exhibits stability, suggesting efficient cost management. Return on Equity (ROE) has shown positive movement, signaling enhanced profitability and efficient use of shareholder equity. The Price-to-Earnings (P/E) ratio, while elevated, might be justifiable given the growth trajectory and positive ROE trend. The Debt-to-Equity ratio shows a slight increase, which warrants monitoring, but is counterbalanced by a healthy Current Ratio, implying sufficient liquidity to meet short-term obligations. Overall, the company presents a favorable picture with growth and profitability, though the leverage should be watched closely. The combination of growth and profitability suggests potential for continued positive performance over the next 12 months.