Here's What Investors Must Know Ahead of D.R. Horton's Q2 Earnings

Core Viewpoint - D.R. Horton Inc. is expected to report a decline in earnings and revenues for the second quarter of fiscal 2025, with significant year-over-year decreases anticipated in key metrics [1][2][3]. Revenue Estimates - The Zacks Consensus Estimate for D.R. Horton's earnings per share (EPS) is $2.67, reflecting a 24.2% decline from the previous year's EPS of$ 3.52 [2]. - Total revenues for the quarter are projected to be between $7.7 billion and$ 8.2 billion, down from $9.1 billion reported a year ago, indicating an 11.2% year-over-year decline [3][4]. Homebuilding Segment Performance - The Homebuilding segment, which accounted for 94.1% of total revenues in the first quarter, is expected to see a decline in revenues due to decreased home closures amid high mortgage rates and tariff uncertainties [4]. - The company anticipates closing between 20,000 and 20,500 homes in the second quarter, a decrease from 22,548 homes closed in the same quarter last year [4][5]. Margin Expectations - The gross margin for home sales is expected to be between 21.5% and 22%, down from 23.2% in the prior year, reflecting a contraction of approximately 150 basis points [7]. - Selling, general and administrative (SG&A) expenses as a percentage of revenues are projected to rise to 8.4%, compared to 7.2% reported a year ago [8]. Orders and Backlog - Net sales orders for the fiscal second quarter are predicted to decline by 4% year over year to 25,406 units [9]. - The backlog is expected to decrease by 9.2% year over year to 16,230 units, with a projected backlog value of$ 6.31 billion, indicating a decline of 10.3% [10]. Earnings Prediction - The current model does not predict an earnings beat for D.R. Horton, with an Earnings ESP of -0.54% and a Zacks Rank of 3 (Hold) [11][12].