Group 1 - The article mentions that Anand Chokkavelu, Jason Hall, and Lou Whiteman have no positions in any of the stocks discussed [1] - The Motley Fool has positions in and recommends D.R. Horton [1] - The Motley Fool has a disclosure policy regarding its investment positions [1]

Core Viewpoint - D.R. Horton reported mixed results for Q4 fiscal 2025, with earnings missing estimates while revenues exceeded expectations, reflecting ongoing challenges in the housing market [2][7]. Financial Performance - Adjusted earnings per share (EPS) were $3.04, missing the Zacks Consensus Estimate of $3.29 by 7.6%, and down 22% year-over-year from $3.92 [7]. - Total revenues amounted to $9.68 billion, a decline of 3.2% year-over-year, but surpassed analysts' expectations of $9.5 billion by 1.9% [7]. - The consolidated pre-tax profit margin was 12.4%, down from 17.1% a year ago [8]. Segment Performance - Homebuilding revenues were $8.56 billion, down 4% from the prior-year quarter, with home sales at $8.54 billion, also down 4.4% year-over-year [9]. - Net sales orders improved by 5% year-over-year to 20,078, with the value of net orders increasing to $7.33 billion from $7.15 billion [10]. - Financial Services revenues decreased by 1.7% to $218.3 million [11], while Forestar contributed $670.5 million to total revenues, up from $551.4 million a year ago [12]. Annual Overview - For fiscal 2025, total revenues fell 6.9% to $34.25 billion, primarily due to a 7.3% decline in home sales revenues [13]. - Homes closed decreased by 5.4% to 84,863 units, with adjusted EPS declining by 19.3% to $11.57 [13]. Liquidity and Capital Management - Cash, cash equivalents, and restricted cash totaled $3.03 billion as of September 30, 2025, down from $4.54 billion at the end of fiscal 2024 [14]. - The company repurchased 30.7 million shares for $4.3 billion during fiscal 2025, with $3.3 billion remaining in stock repurchase authorization [16]. Future Guidance - D.R. Horton expects consolidated revenues for fiscal 2026 to be in the range of $33.5-$35 billion, with homes closed anticipated between 86,000-88,000 [17]. Market Sentiment - Since the earnings release, there has been a downward trend in estimates revision, with the consensus estimate shifting down by 14.72% [18]. - The stock has a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [20].

Company Performance - D.R. Horton (DHI) closed at $156.76, marking a +1.44% move from the prior day, outperforming the S&P 500's gain of 0.69% [1] - Over the previous month, DHI shares gained 0.51%, while the Construction sector lost 3.09% and the S&P 500 lost 0.31% [1] Earnings Forecast - The upcoming earnings report is expected to show an EPS of $1.97, indicating a 24.52% decline year-over-year, with quarterly revenue projected at $6.71 billion, down 11.81% from the previous year [2] - Full-year Zacks Consensus Estimates predict earnings of $11.41 per share and revenue of $34.33 billion, reflecting year-over-year changes of -1.38% and +0.24%, respectively [3] Analyst Estimates and Rankings - Recent changes in analyst estimates suggest a favorable outlook on D.R. Horton's business health and profitability [3] - The Zacks Rank system currently rates D.R. Horton at 4 (Sell), with a 5.18% decrease in the Zacks Consensus EPS estimate over the last 30 days [5] Valuation Metrics - D.R. Horton has a Forward P/E ratio of 13.54, which is a premium compared to its industry's Forward P/E of 12.26 [6] - The company also has a PEG ratio of 1.84, aligning with the average PEG ratio of the Building Products - Home Builders stocks [6] Industry Context - The Building Products - Home Builders industry is part of the Construction sector, holding a Zacks Industry Rank of 215, placing it in the bottom 13% of over 250 industries [7]

Core Insights - The housing market is currently struggling but shows signs of recovery, with easing interest rates and home prices expected to lead to improvements by 2026 [2][7] - Companies like D.R. Horton, Lowe's, and Whirlpool are well-positioned to benefit from the anticipated recovery in the housing market, with long-term stock price growth expected [3][7] Company-Specific Insights - D.R. Horton, as the largest homebuilder in the U.S., is facing revenue pressure due to falling home prices in 2025, but ongoing volume growth is crucial for sustaining cash flow and capital returns [4] - The company has reduced its share buyback forecast but still expects robust buybacks at approximately 5.8% of its late-November market cap, following a nearly 10% decline in FY2025 [5] - D.R. Horton offers a reliable dividend yielding about 1.25%, with a payout ratio below 15% of earnings, and share buybacks are expected to support per-share metrics [6] Market Sentiment - Analyst sentiment is mixed, with some price target reductions balanced by increases, but overall bullish due to institutional buying, which is more than $2 for every $1 sold in the first half of Q4 [9] - Institutional ownership exceeds 90% of D.R. Horton stock, indicating strong support for the company as it navigates the housing market recovery [9]

Core Insights - Homebuilder stocks experienced significant gains following comments from a Federal Reserve official suggesting a potential rate cut in December [2][8] - The likelihood of a rate cut has increased to approximately 70%, up from 39% the previous day, according to CME Group's FedWatch tool [3] - Major homebuilder stocks such as Builders FirstSource, D.R. Horton, and KB Home saw their shares rise by about 7% on Friday, with other related stocks also benefiting from the news [4][8] Impact on Homebuilders - A potential reduction in the Federal Reserve's benchmark interest rate could lead to lower mortgage rates, making homes more affordable and stimulating demand from homebuyers [5][7] - Despite the positive outlook, many homebuilder stocks remain in negative territory for 2025 due to a sluggish housing market and elevated mortgage rates [6] Market Reactions - The comments from Federal Reserve Bank of New York president John Williams have fueled optimism among traders, leading to a surge in homebuilder stock prices [2][4] - Stocks connected to real estate, including Zillow Group and Rocket Companies, also saw gains as a result of the increased expectations for a rate cut [4]

Market Overview - The U.S. stock market experienced a significant rebound on November 21, 2025, with major indexes closing higher, recovering from earlier losses driven by optimism regarding potential interest rate cuts by the Federal Reserve [1][4] - The Dow Jones Industrial Average (DJI) rose 1.4%, adding 650 points, while the S&P 500 (SPX) gained 1.4%, closing at 6,590 points, and the Nasdaq Composite (IXIC) increased by 1.5% [2] Federal Reserve Influence - New York Federal Reserve President John Williams indicated support for a potential interest rate cut "in the near term," which shifted market expectations significantly, raising the likelihood of a rate cut at the December meeting to 73.1% from 39.1% [4] Corporate Performance - Nvidia (NVDA) reported a 62% year-over-year revenue increase to $57 billion, but its shares fell 3.2% on Thursday and 1.7% on Friday due to concerns over AI valuations [5] - Walmart (WMT) saw its stock decline by approximately 2% on Friday after a strong performance on Thursday, where it had jumped 6.5% following better-than-expected third-quarter results [6] - Retailers like Gap (GPS) and Ross Stores (ROST) had positive performances, with Gap surging 9.5% and Ross jumping 8.5% due to strong earnings [7] Notable Stock Movements - Alphabet (GOOGL) increased by over 3%, while Meta Platforms (META) added 1%. In contrast, Microsoft (MSFT) shares fell approximately 1%, and Oracle (ORCL) slid more than 4% [8] Upcoming Earnings and Economic Data - Several companies, including BJ's Wholesale Club Holdings (BJ) and IES Holdings (IESC), reported earnings after the market closed, with BJ's EPS at $1.16 against a forecast of $1.10 [9][10] - The upcoming week will feature key economic data releases, including the Producer Price Index (PPI) and Retail Sales for September, which were delayed due to a government shutdown [12]

Financial Performance - Consolidated revenues decreased by 7% to $34.3 billion in fiscal 2025 compared to $36.8 billion in fiscal 2024[166] - Pre-tax income fell by 25% to $4.7 billion, with a pre-tax operating margin of 13.8% compared to 17.1% in the previous year[175] - Net sales orders decreased by 4% to 83,423 homes, with the value of net sales orders declining by 6% to $30.8 billion[175] - Home sales revenue fell to $31.4 billion (84,863 homes closed) in fiscal 2025, down from $33.9 billion (89,690 homes closed) in fiscal 2024, primarily due to a 5% decrease in closings volume and a 2% decrease in average selling price[190] - Pre-tax income decreased to $4.7 billion in fiscal 2025 from $6.3 billion in fiscal 2024, with contributions from homebuilding, rental, financial services, and Forestar businesses[246] Home Sales and Orders - Homes closed decreased by 5% to 84,863, with an average closing price of $370,400, down 2% from the prior year[175] - Home sales gross margin decreased to 21.5% from 23.5% due to increased sales incentives[168] - The average selling price of homes closed in fiscal 2025 was $370,400, a 2% decrease from $378,000 in fiscal 2024[190] - The cancellation rate for sales orders remained stable at 18% for fiscal 2025, consistent with the previous year[182] - Sales order backlog as of September 30, 2025, was 10,785 homes valued at $4.12 billion, representing an 11% decrease in homes and a 14% decrease in value compared to 2024[187] Regional Performance - Homebuilding revenues decreased by 3% in the Northwest region for fiscal 2025, generating pre-tax income of $395.7 million compared to $420.8 million in fiscal 2024[207] - Homebuilding revenues in the Southwest region decreased by 6% in fiscal 2025, with pre-tax income dropping to $517.1 million from $703.5 million in fiscal 2024[208] - The South Central region experienced a 10% decrease in homebuilding revenues, resulting in pre-tax income of $964.6 million, down from $1.3 billion in fiscal 2024[209] - Southeast region homebuilding revenues fell by 21% in fiscal 2025, with pre-tax income decreasing to $839.9 million from $1.4 billion in fiscal 2024[210] - The East region saw a slight increase of 1% in homebuilding revenues, generating pre-tax income of $834.0 million compared to $1.1 billion in fiscal 2024[212] - The North region reported a 15% increase in homebuilding revenues, with pre-tax income rising to $583.6 million from $498.4 million in fiscal 2024[213] Financial Services - Financial services revenues decreased by 5% to $841.2 million, with pre-tax income at $278.7 million compared to $311.2 million[179] - Total revenues from financial services decreased by 5% to $841.2 million in fiscal 2025 from $882.5 million in fiscal 2024[236] - Financial services pre-tax income decreased to $278.7 million in fiscal 2025 from $311.2 million in fiscal 2024, a decline of approximately 10%[236] - Other income from financial services operations fell by 12% to $88.9 million in fiscal 2025, down from $101.1 million in the prior year, primarily due to reduced interest income on loan origination volume[243] Inventory and Assets - Total homebuilding inventories as of September 30, 2025, amounted to $20.3 billion, compared to $20.0 billion in 2024[216] - Approximately 19,600 homes were unsold in inventory as of September 30, 2025, compared to 25,700 unsold homes in 2024[221] - The total remaining purchase price of lots controlled through land and lot purchase contracts was $26.0 billion as of September 30, 2025, up from $25.2 billion in 2024[219] - Forestar's inventory totaled $2.6 billion at September 30, 2025, an increase from $2.3 billion in 2024[232] Cash Flow and Financing - Cash provided by operating activities increased to $3.4 billion from $2.2 billion in fiscal 2024[167] - Net cash provided by operating activities was $3.4 billion, an increase from $2.2 billion in fiscal 2024, primarily driven by net income[285] - Net cash used in financing activities in fiscal 2025 was $4.8 billion, including $4.3 billion for share repurchases and $1.0 billion for repayment of homebuilding senior notes[289] - The company repurchased 30.7 million shares at a total cost of $4.3 billion during fiscal 2025, with $3.3 billion remaining under the stock repurchase authorization[263] Debt and Interest - Interest incurred increased 104% to $103.1 million in fiscal 2025 from $50.5 million in fiscal 2024, driven by a rise in the weighted average interest rate and a 33% increase in average debt[203] - The company had outstanding notes payable totaling $6.0 billion as of September 30, 2025, with $1.6 billion due within 12 months[252] - Forestar's ratio of debt to total capital increased to 31.2% at September 30, 2025, compared to 30.7% in the previous year[269] Tax and Legal Matters - The effective tax rate remained stable at 23.6% in fiscal 2025 compared to 23.5% in fiscal 2024, with income tax expenses of $1.1 billion and $1.5 billion, respectively[247] - The new law terminating the energy efficient home tax credit is expected to reduce tax benefits starting in fiscal 2026, with benefits of $39.5 million in fiscal 2025 compared to $70.4 million in 2024[249] - The company reported reserves for approximately 875 pending construction defect claims, with costs totaling $57.2 million for resolved claims during fiscal 2025[319] - The company has established reserves for legal claims, with approximately 98% related to construction defect matters as of September 30, 2025[318] Market Conditions and Future Outlook - The company plans to maintain elevated sales incentives to support demand based on market conditions and mortgage interest rates[168] - The company plans to maintain elevated incentive levels in fiscal 2026, depending on market conditions and mortgage interest rates[195] - The company is exposed to risks from adverse developments in capital markets, which could limit access to capital and impact liquidity[302] - The company is currently evaluating the impact of new accounting standards on its consolidated financial statements, effective in fiscal 2026 and 2028[323][324]

Core Viewpoint - Berkshire Hathaway, led by Warren Buffett, has made significant changes to its stock portfolio in the third quarter, including a new investment in Alphabet and a reduction in its holdings of Apple [3][12]. Group 1: Portfolio Changes - Berkshire Hathaway initiated a position in Alphabet, purchasing approximately 17.8 million shares valued at about $4.34 billion, representing 1.62% of its total portfolio [7][10]. - The total market value of Berkshire's stock holdings reached $267 billion, with the top ten holdings accounting for 86.69% of the total portfolio [5][6]. - In the third quarter, Berkshire sold off about 41.8 million shares of Apple, reducing its stake by 14.92%, while still holding over 238 million shares valued at approximately $60.66 billion, making Apple its largest holding [12][14]. Group 2: Increased Holdings - Berkshire increased its stake in Chubb Limited (formerly known as ACE Limited) by approximately 4.3 million shares, raising its market value by $1.21 billion, with the holding percentage increasing from 3.04% to 3.31% [9][10]. - Additional increases were noted in Sirius XM, Domino's Pizza, and Lennar Corporation, reflecting a strategic focus on these companies [9]. Group 3: Reduced Holdings - The company further reduced its holdings in Bank of America by approximately 37.2 million shares, decreasing its stake from 11.12% to 10.96% [12][14]. - Berkshire completely exited its position in D.R. Horton, selling all 1.485 million shares, which is significant given the company's role as a barometer for the U.S. housing market [14][15].

Core Viewpoint - Berkshire Hathaway, led by Warren Buffett, has made significant changes to its investment portfolio in the third quarter, including a new position in Alphabet and a reduction in its holdings of Apple and other stocks [2][11]. Summary by Sections New Purchases - Berkshire initiated a new position in Alphabet, purchasing approximately 17.85 million shares, valued at about $4.34 billion, which represents 1.62% of its total portfolio and ranks as the tenth largest holding [6][9]. Increased Holdings - The company increased its stake in Chubb Limited (insurance) by about 4.3 million shares, raising its market value by $1.21 billion, with the holding percentage increasing from 3.04% to 3.31% [8]. Reduced Holdings - Berkshire sold approximately 41.79 million shares of Apple, a reduction of over 14.92%, leaving it with over 238.21 million shares valued at approximately $60.66 billion, making Apple still the largest holding [11][12]. - The company also reduced its holdings in Bank of America by about 37.22 million shares, decreasing its stake from 11.12% to 10.96% [14]. - Berkshire completely exited its position in D.R. Horton, selling all 1.4854 million shares, which is significant as the company is considered a barometer for the U.S. housing market [11][13]. Overall Portfolio Changes - As of the end of the third quarter, Berkshire held a total of 41 stocks in the U.S. market, with a total market value of $267 billion, an increase from $258 billion in the previous quarter. The top ten holdings accounted for 86.69% of the total portfolio [4][5].

Core Insights - D.R. Horton Inc (NYSE:DHI) has retraced to multiple support levels, including its 200-day moving average and year-to-date anchored volume-weighted average price (AVWAP) [2] - The stock is also near its year-to-date breakeven level and a 61.8% Fibonacci retracement from its 2025 lows to highs [2] Options Market Analysis - DHI is approaching the second largest put open interest (OI) level for the second month contract, indicating potential support [4] - Despite a slight unwinding of pessimism among options traders, puts still outnumber calls, with a 10-day put/call volume ratio of 1.13 at major exchanges [4] - The current options are reasonably priced, with a Schaeffer's Volatility Index (SVI) of 35%, ranking in the low 15th percentile of its annual range, suggesting low volatility expectations [5] Trading Recommendations - A recommended call option has a leverage ratio of 7.5, which will double with a 12.9% increase in the underlying equity [6]