Following D.R. Horton’s fiscal Q1 2026 report, UBS reaffirmed its Buy rating on the shares and raised its 12-month price target from $191 to $193. Meanwhile, at least two other brokerage firms—including one that had previously maintained a Hold rating—lifted earnings-per-share estimates for fiscal 2026 by an average of 4%, citing stronger-than-anticipated margins and healthy backlog trends. These revisions reflect growing confidence in the company’s ability to navigate a challenging housing environment and deliver steady free cash flow.

In the quarter ended December 31, D.R. Horton reported adjusted earnings per share of $2.03, topping the consensus estimate of $1.98. Total revenues of $8.4 billion also exceeded the street by 2%. However, both metrics declined roughly 20% from the year-ago period, driven by a 15% reduction in average selling price as management offered targeted sales incentives to counteract affordability headwinds. Gross margin held at 23.7%, broadly in line with guidance.

Net sales orders came in at 18,300 homes, up 3% year over year but missing the analyst forecast of 18,653 by 2%. Management noted that rising mortgage rates—which averaged just over 6% in Q1—and elevated construction costs have prompted incentives equivalent to roughly 1.5% of home sale prices. These promotions have successfully sustained demand among first-time buyers but have compressed profits, with operating margin slipping to 11.6% versus 12.2% a year earlier.

As of December 31, the company held $5.8 billion in unrestricted cash and revolver availability, maintaining a net debt-to-capital ratio below 20%. D.R. Horton’s homes under contract backlog rose 8% sequentially to 35,400 units, representing nearly 12 months of expected closings at current build rates. Management reiterated its plan to deploy excess cash toward land acquisitions in key Sun Belt markets and to accelerate select community openings if interest rates stabilize in the coming quarters.