What Happened?

Shares of homebuilder (NYSE:DHI) fell 12.5% in the morning session after the company reported weak third-quarter earnings results. Its full-year revenue guidance missed, and its EBITDA fell short of Wall Street's estimates. DHI highlighted macro challenges similar to some of the housing stocks that have reported this season. Management added "We believe that rate volatility and uncertainty are causing some buyers to stay on the sidelines in the near term." Overall, this was a softer quarter.

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What The Market Is Telling Us

D.R. Horton’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for D.R. Horton and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock gained 11.7% on the news that the company reported second quarter earnings results that beat analysts' revenue expectations; Its EPS also outperformed Wall Street's estimates. 

On the other hand, its backlog missed analysts' estimates, and since this is a leading indicator of revenue, it is a bad sign for future topline trends. As such, the company lowered full year revenue guidance. 

On a more positive note, the Board of Directors approved a new share repurchase authorization of $4.0 billion, a sign that the company is committed to returning value to shareholders. 

Overall, this was a mixed quarter for D.R. Horton, with the stock likely up due to the announced buyback program.

D.R. Horton is up 10.1% since the beginning of the year, but at $165.15 per share, it is still trading 16.2% below its 52-week high of $197.06 from September 2024. Investors who bought $1,000 worth of D.R. Horton’s shares 5 years ago would now be looking at an investment worth $3,203.

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