AI Takeaway
D.R. Horton (DHI) reported a challenging Q1 FY2026 with revenue declining 9.5% YoY to $6.9B and net income falling 29.6% to $594.8M, though operating cash flow improved 32.1% to $854M amid a softer housing market.
Revenue
$6.89B
-9.54% YoY
EPS (Basic)
$2.03
-22.81% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue fell 9.5% YoY from $7.6B to $6.9B in Q1 FY2026, indicating weaker homebuilding activity likely driven by elevated mortgage rates and affordability pressures weighing on buyer demand.
Source: Source: 10-Q Income Statement, Financial Data
Net margin contracted to 8.6% in Q1 FY2026 from approximately 11.1% in the prior-year period, as cost of revenue declined only 7.2% against a steeper 9.5% revenue drop, reflecting limited ability to reduce costs proportionally with sales.
Source: Source: 10-Q Income Statement, Financial Data
Despite lower earnings, operating cash flow surged 32.1% YoY to $854M, suggesting improved inventory management and working capital efficiency even as the top line contracted.
Source: Source: 10-Q Cash Flow Statement, Financial Data
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Upgrade to unlockDHI's revenue declined 9.5% YoY to $6.9B, reflecting the direct impact of elevated mortgage rates and reduced housing affordability on homebuyer demand. Prolonged high interest rates could further suppress order volumes and pricing power, compressing margins beyond the current 8.6% net margin level.
Source: Source: 10-Q Income Statement, Financial Data
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Upgrade to unlockReported EPS of $2.03 versus the $1.95 analyst consensus — a +4.0% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $6.89B | $7.61B | -9.54% |
Cost of Revenue | $5.29B | $5.7B | -7.20% |
Net Income | $594.8M | $844.9M | -29.60% |
EPS (Basic) | $2.03 | $2.63 | -22.81% |
EPS (Diluted) | $2.03 | $2.61 | -22.22% |
SG&A Expense | $865.1M | $878.1M | -1.48% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $34.64B | $35.03B | -1.11% |
Total Liabilities | $10.08B | $9.57B | +5.41% |
Stockholders' Equity | $24B | $24.94B | -3.80% |
Cash & Equivalents | $2.51B | $3.05B | -17.83% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $854M | $646.7M | +32.06% |
Investing Cash Flow | $-116.2M | $-57.1M | -103.50% |
Financing Cash Flow | $-1.22B | $-2.06B | +41.00% |
Share Buybacks | $669.7M | $1.1B | -39.12% |
D&A | $27.7M | $24.1M | +14.94% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Net Margin | 8.6% | — | — |
ROE | 2.5% | — | — |
ROA | 1.7% | — | — |
Debt to Equity | $0.42 | — | — |
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D.R. Horton reported Q1 FY2026 revenue of $6.9B, down 9.5% YoY, and net income of $594.8M, down 29.6% YoY. Basic EPS came in at $2.03, compared to $2.63 in Q1 FY2025, reflecting a meaningful earnings decline amid a challenging housing market.
DHI's revenue declined 9.5% YoY to $6.9B in Q1 FY2026, likely driven by affordability pressures from elevated mortgage rates reducing homebuyer demand. The decline in home closings and/or average selling prices outpaced the company's ability to cut costs, leading to a sharper 29.6% drop in net income.
DHI's balance sheet remains relatively solid with a conservative debt-to-equity ratio of 0.42x and stockholders' equity of $24.0B, though cash declined 17.8% YoY to $2.5B and total liabilities rose 5.4% to $10.1B. Operating cash flow improved strongly to $854M (+32.1% YoY), suggesting the company is managing its working capital effectively.
Yes, DHI repurchased $669.7M in shares during Q1 FY2026, though this was 39.1% lower than the $1.1B in buybacks in Q1 FY2025, indicating the company is moderating capital returns to preserve liquidity in a softer housing environment.
The key risks include continued housing market weakness driven by high mortgage rates and affordability constraints, margin pressure from sticky construction and land costs (cost of revenue fell only 7.2% vs. a 9.5% revenue decline), and declining cash reserves (down 17.8% YoY to $2.5B). Rising total liabilities (+5.4% YoY) alongside declining equity (-3.8% YoY) also merit investor attention.