TRI Pointe Shares Under Pressure Following Quarterly Report

TRI Pointe's latest financial results highlight the persistent headwinds facing the U.S. homebuilding sector. The company's third-quarter 2025 earnings report revealed a significant contraction in key operational metrics, though a consensus of market experts maintains a constructive medium-term view on the stock.

For the quarter, the homebuilder posted revenue of $817.3 million, a decline of 26.6% compared to the same period last year. This drop was primarily driven by a nearly 25% reduction in home deliveries, which totaled 1,217 units. The average selling price for a delivered home stood at $672,000. Net income for the quarter was reported at $56.1 million, translating to diluted earnings per share of $0.64. TRI Pointe's adjusted homebuilding gross margin was 21.6%.

A Concerning Trend in New Orders

A critical forward-looking indicator, new orders, presented a worrying picture. The company booked orders for just 995 units during the quarter. Consequently, its total backlog—representing sold but undelivered homes—shrunk substantially to 1,298 homes by the quarter's end. This marks a sharp decrease from the 2,325 homes in backlog reported one year prior. The dollar value of the current backlog is approximately $1.0 billion.

Should investors sell immediately? Or is it worth buying TRI Pointe?

An interesting pricing dynamic emerged within the backlog data. While the average price of delivered homes was $672,000, the average price within the order backlog increased from $745,000 to $781,000. This suggests a strategic pivot toward higher-priced inventory, a move that may bolster revenue per unit but does not address the core issue of falling sales volume.

Guidance and Market Sentiment

Looking ahead, management provided delivery guidance for the fourth quarter of 1,200 to 1,400 homes at an average price between $690,000 and $700,000. For the full 2025 fiscal year, TRI Pointe anticipates 4,800 to 5,000 deliveries with an average price around $680,000. The company also plans to expand its number of active selling communities by 10–15% by the end of 2026.

Financially, the near-term outlook appears subdued. Earnings per share for the coming year are projected to fall by 11.73%, from $3.58 to $3.16. Despite this, analyst sentiment remains positive. Seven covering analysts unanimously maintain a "Moderate Buy" rating on the equity. Their average price target is $39.25, implying a potential upside of 16.5% from the recent share price of $33.70. Individual price targets range from $34.00 to $43.00. The company's next major test will be the publication of its Q4 results.