D.R. Horton Q4 2026 earnings: profit falls short of estimates as incentives weigh on margins
D.R. Horton's profit fell and missed Wall Street forecasts even as revenue topped estimates, as the homebuilder kept discounting to move houses amid soft buyer demand and gave a cautious fiscal 2027 outlook.
| Q4 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $2.67 | $3.05 | -12.5% |
| Revenue | $9.37B | $9.08B | +3.2% |
Key takeaways
- Profit and earnings per share fell from a year ago and came in below what Wall Street analysts had expected, even though total revenue edged above forecasts — a sign the company sold more homes in dollar terms but kept less profit per home.
- New home orders fell and the cancellation rate jumped to roughly 23% of contracts, up from about 19-20% a year earlier, pointing to buyers who are more hesitant to commit given higher mortgage rates and affordability strain.
- The company kept leaning on incentives such as mortgage-rate buydowns and price concessions to get deals done; CEO Paul Romanowski (serving alongside David Auld) indicated incentives are likely to stay elevated into fiscal 2027, with the exact level depending on how rates and buyer demand evolve.
- Profitability margins have narrowed from their post-pandemic peak: trailing-twelve-month gross margin sits near 22.9% and net profit margin near 9.2%, reflecting the cost of those incentives and discounting needed to keep homes selling.
- Revenue and earnings per share were both lower over the trailing year (down about 3.5% and 15.7%, respectively), underscoring that the housing slowdown has been a multi-quarter trend rather than a one-off weak quarter.
- For fiscal 2027, D.R. Horton guided to lower companywide revenue of about $30 billion to $32 billion and fewer home closings (roughly 79,000 to 84,000), down from fiscal 2026’s $33.0 billion in revenue and 84,202 homes closed — a cautious outlook that assumes little near-term relief in mortgage rates.
- Despite the softer sales outlook, the board raised the quarterly dividend 11% to $0.50 per share and the company laid out plans to return roughly $3 billion to shareholders via stock buybacks and about $500 million in dividends over fiscal 2027, signaling confidence in its balance sheet.
- D.R. Horton ended the fiscal year with about $7.2 billion in liquidity (cash plus available credit), giving it a cushion to keep building and returning cash to shareholders even as the housing market cools.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 22.9% | Trailing 12 months |
| Operating margin | 12.3% | Trailing 12 months |
| Net profit margin | 9.2% | Trailing 12 months |
| Pretax margin | 12.3% | Trailing 12 months |
| EPS | $10.51 | Trailing 12 months |
| Revenue growth (YoY) | -3.5% | Trailing 12 months |
| EPS growth (YoY) | -15.7% | Trailing 12 months |
| Return on equity | 12.8% | Trailing 12 months |
Sources: company report · earnings call