D.R. Horton Inc. DHI is slated to report results for the second quarter of fiscal 2025 (ended March 31, 2025) on April 17, before the opening bell.

In the last quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 8.8% and 6.8%, respectively. However, the metrics declined 7.4% and 1.5% from the year-ago figures.

Markedly, D.R. Horton reported better-than-expected earnings in three of the trailing four quarters and missed on one occasion, the average surprise being 6.1%.

How are Estimates Placed for D.R. Horton Stock?

The Zacks Consensus Estimate for the quarter’s earnings per share (EPS) has remained unchanged at $2.67 over the past 60 days. The estimated figure indicates a decline of 24.2% from the year-ago EPS of $3.52. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The consensus mark for revenues is $8.09 billion, indicating a 11.2% year-over-year decline.

Factors Likely to Influence DHI’s Q2 Results

Revenues

D.R. Horton’s total revenues in the fiscal second quarter are likely to have registered weakness from its Homebuilding segment. The company anticipates the quarter’s total revenues to be between $7.7 billion and $8.2 billion compared with $9.1 billion reported a year ago.

Under the Homebuilding segment (which contributed 94.1% of first-quarter fiscal 2025 total revenues), the revenues are expected to have declined due to a decrease in homes closed, given the still high mortgage rates circulating the housing market and the uncertainties regarding the new tariffs. Due to the suppressed market scenario and lingering inflation, the expectations of further rate cuts have also been paused for the time being, marring growth prospects. The company expects total homes closed to be between 20,000 and 20,500 units during the second quarter, down from 22,548 home closures made in the year-ago quarter.

Our model predicts Homebuilding revenues to decline 11% year over year to $7.54 billion. We also expect home closures to be 20,180 units, down 10.5% year over year. We expect Rental Property (which contributed 2.9% of first-quarter fiscal 2025 total revenues) revenues to be $290 million, which implies a 21.9% decline from the year-ago level.

On the other hand, our model predicts Forestar (which contributed 3.3% of first-quarter fiscal 2025 total revenues) revenues to be $382.8 million, which indicates 14.7% growth from the year-ago level. We expect the Financial Services segment’s (which contributed 2.4% of first-quarter fiscal 2025 total revenues) revenues to be $225.9 million, which indicates growth of 0.1% from the year-ago level.

Margins

A persisting inflationary environment, along with concerns for labor and material supply amid tariff discussions is expected to have pushed down the fiscal second-quarter margins. Also, costs associated with the expansion of DHI’s operating platform and elevated expenses due to increased incentive offerings are likely to have added to the downtick. The company expects the home sales gross margin to be between 21.5% and 22%, down from 23.2% reported in the year-ago quarter. Our model predicts the metric to be about 21.7%, reflecting a 150 basis points (bps) year-over-year contraction.

We expect the quarter’s homebuilding SG&A, as a percentage of revenues, to be 8.4% compared with 7.2% reported a year ago.

Orders & Backlog

For the fiscal second quarter, our model predicts net sales orders to decline 4% year over year to 25,406 units. The same for backlog is currently pegged at 16,230 units, which indicates a 9.2% decrease from the 17,873 units reported a year ago. Our model predicts the value of the backlog to be $6.31 billion, implying a decline of 10.3% year over year.

What the Zacks Model Unveils for DHI

Our proven model does not conclusively predict an earnings beat for D.R. Horton this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.

Earnings ESP: DHI has an Earnings ESP of -0.54%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With the Favorable Combinations

Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to beat on earnings in their respective quarters to be reported.

Vulcan Materials Company VMC currently has an Earnings ESP of +5.71% and a Zacks Rank of 3.

The company’s earnings for the first quarter of 2025 are expected to remain at par year over year. Vulcan reported better-than-expected earnings in two of the last four quarters and missed on the remaining two occasions, the average surprise being 4.6%.

United Rentals, Inc. URI currently has an Earnings ESP of +5.32% and a Zacks Rank of 3.

The company’s earnings for the first quarter of 2025 are expected to decrease 2.5%. United Rentals reported better-than-expected earnings in two of the last four quarters and missed on the remaining two occasions, the average surprise being 1.2%.

Martin Marietta Materials, Inc. MLM has an Earnings ESP of +1.37% and a Zacks Rank of 3.

The company reported better-than-expected earnings in two of the last four quarters and missed on the remaining two occasions, the negative average surprise being 1.7%. Martin Marietta’s earnings for the first quarter of 2025 are expected to decline 3.1%.

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This article originally published on Zacks Investment Research (zacks.com).

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