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DR Horton (DHI)
NYSE:DHI
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DR Horton
(NYSE:DHI)
75Outperform
Positive Factors
Financial Strength
D.R. Horton's net debt to cap stands at 10.4%, which is below its 4-year average, indicating effective management of cash balances and debt.
Inventory Management
Inventories under control — While there has been some buildup in parts of FL & TX, management sees inventory levels across its footprint as manageable, with other builders remaining fairly disciplined around spec inventories.
Long-term Positioning
D.R. Horton is well-positioned to capitalize on long-term demands driven by favorable demographics and declining interest rates.
Negative Factors
Affordability Challenges
Spring selling season started slower than expected due to affordability challenges and weak consumer confidence.
Earnings Performance
D.R. Horton reported earnings below expectations, with weaker deliveries and higher SG&A offsetting better gross margin.
Margin Outlook
Higher incentives and SG&A pressure the margin outlook, with a decline in gross margin expected.
DR Horton (DHI) vs. S&P 500 (SPY)
Market Cap
$38.63B
Dividend Yield1.11%
Average Volume (3M)3.87M
Price to Earnings (P/E)9.5
Beta (1Y)0.78
Revenue Growth-4.71%
EPS Growth-10.19%
CountryUS
Employees14,766
SectorConsumer Cyclical
Sector Strength75
IndustryResidential Construction
Share Statistics
EPS (TTM)2.58
Shares Outstanding307,181,300
10 Day Avg. Volume3,194,728
30 Day Avg. Volume3,868,697
Financial Highlights & Ratios
PEG Ratio-1.33
Price to Book (P/B)1.57
Price to Sales (P/S)0.00
P/FCF Ratio13.67
Enterprise Value/Market Cap1.08
Enterprise Value/Revenue0.28
Enterprise Value/Gross Profit4.62
Enterprise Value/Ebitda1.73
Forecast
1Y Price Target
$140.70Price Target Upside12.62% Upside
Rating ConsensusHold
Number of Analyst Covering10
DR Horton Business Overview & Revenue Model
Company DescriptionD.R. Horton, Inc. operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. It engages in the acquisition and development of land; and construction and sale of residential homes in 31 states and 98 markets under the names of D.R. Horton, America's Builder, Express Homes, Emerald Homes, and Freedom Homes. The company constructs and sells single-family detached homes; and attached homes, such as town homes, duplexes, and triplexes. It also provides mortgage financing services; and title insurance policies, and examination and closing services, as well as engages in the residential lot development business. In addition, the company develops, constructs, owns, leases, and sells multi-family and single-family rental properties; owns non-residential real estate, including ranch land and improvements; and owns and operates energy related assets. It primarily serves homebuyers. D.R. Horton, Inc. was founded in 1978 and is headquartered in Arlington, Texas.
How the Company Makes MoneyD.R. Horton makes money primarily through the construction and sale of residential homes across the United States. The company's key revenue streams include the sale of single-family homes, townhomes, and condominiums. These homes are sold under different brand names, each targeting specific customer segments, such as first-time homebuyers or luxury market clients. Revenue is generated when these homes are sold to customers, with the sales price being influenced by factors such as location, size, and market demand. Additionally, D.R. Horton benefits from economies of scale due to its large operational footprint and strong supplier relationships, which help in cost management and maintaining competitive pricing. The company may also generate ancillary income through financial services, offering mortgage financing and title services to its homebuyers, further contributing to its overall earnings.
DR Horton Financial Statement Overview
Summary
DR Horton maintains a strong financial position with excellent profitability and cash flow management. The company exhibits stable leverage and efficient capital utilization, but the decline in revenue growth over the period indicates a potential area for improvement. The company’s financials are robust, but maintaining growth momentum will be crucial moving forward.Income Statement
DR Horton demonstrates strong profitability with a TTM Gross Profit Margin of 42.03% and a Net Profit Margin of 12.16%, indicating efficient cost management. However, the Revenue Growth Rate shows a decline of 4.05% from the previous year, which may signal potential challenges in maintaining growth momentum. The EBIT Margin of 31.79% and EBITDA Margin of 12.63% suggest robust operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is solid with a Debt-to-Equity Ratio of 0.26, reflecting low leverage and financial stability. The Return on Equity stands at 17.26%, showcasing effective use of equity. However, the Equity Ratio of 69.65% highlights a conservative capital structure, which, while stable, may limit growth potential.78
Positive
Cash Flow
DR Horton shows strong cash flow management with a Free Cash Flow to Net Income Ratio of 0.65, indicating substantial cash generation relative to net income. The Free Cash Flow Growth Rate is 37.13%, reflecting improved operational efficiency. The Operating Cash Flow to Net Income Ratio of 0.67 further supports the company's effective cash flow management.82
Very Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 35.32B | 36.80B | 35.46B | 33.48B | 27.77B | 20.31B | Gross Profit |
| 9.01B | 9.54B | 9.35B | 10.50B | 7.88B | 4.94B | EBIT |
| 5.45B | 6.10B | 6.42B | 7.57B | 5.32B | 2.83B | EBITDA |
| 5.55B | 6.37B | 6.19B | 7.65B | 5.40B | 2.91B | Net Income Common Stockholders |
| 4.29B | 4.76B | 4.75B | 5.86B | 4.18B | 2.37B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.09B | 4.54B | 3.87B | 2.54B | 3.21B | 3.02B | Total Assets |
| 34.40B | 36.10B | 32.58B | 30.35B | 24.02B | 18.91B | Total Debt |
| 5.99B | 5.97B | 5.09B | 6.07B | 5.41B | 4.28B | Net Debt |
| 2.89B | 1.45B | 1.22B | 3.53B | 2.20B | 1.26B | Total Liabilities |
| 10.10B | 10.28B | 9.44B | 10.57B | 8.80B | 6.79B | Stockholders Equity |
| 23.82B | 25.31B | 22.70B | 19.40B | 14.89B | 11.84B |
| Cash Flow | Free Cash Flow | ||||
| 2.74B | 2.02B | 4.16B | 413.60M | 267.00M | 1.13B | Operating Cash Flow |
| 2.87B | 2.19B | 4.30B | 561.80M | 534.40M | 1.42B | Investing Cash Flow |
| -219.10M | -190.60M | -310.20M | -414.90M | -252.20M | -166.10M | Financing Cash Flow |
| -3.23B | -1.36B | -2.67B | -811.20M | -85.10M | 270.60M |
DR Horton Technical Analysis
Neutral
124.93
Price Trends
125.20
Negative
130.72
Negative
152.98
Negative
Market Momentum
-0.05
Negative
50.91
Neutral
55.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DHI, the sentiment is Neutral. The current price of 124.93 is above the 20-day moving average (MA) of 124.72, below the 50-day MA of 125.20, and below the 200-day MA of 152.98, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 50.91 is Neutral, neither overbought nor oversold. The STOCH value of 55.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DHI.
DR Horton Risk Analysis
DR Horton disclosed 25 risk factors in its most recent earnings report. DR Horton reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
DR Horton Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $20.93B | 7.37 | 25.52% | 0.80% | 8.86% | 13.60% | |
79 Outperform | $10.67B | 7.38 | 20.38% | 0.88% | 5.86% | 12.20% | |
79 Outperform | $6.02B | 6.98 | 15.97% | ― | 12.19% | 23.15% | |
76 Outperform | $21.38B | 15.05 | 38.25% | ― | 8.81% | 1.79% | |
75 Outperform | $38.63B | 9.51 | 17.83% | 1.11% | -4.71% | -10.19% | |
71 Outperform | $29.20B | 8.15 | 14.97% | 1.79% | 2.03% | -3.80% | |
61 Neutral | $6.97B | 11.38 | 2.88% | 3.90% | 2.64% | -22.07% |
* Consumer Cyclical Sector Average
Performance Comparison
DHI
DR Horton
124.93
-23.81
-16.01%
LEN
Lennar
111.17
-43.83
-28.28%
NVR
NVR
7,313.52
-364.24
-4.74%
PHM
PulteGroup
103.07
-15.28
-12.91%
TOL
Toll Brothers
106.05
-23.95
-18.42%
TMHC
Taylor Morrison
59.33
-0.55
-0.92%
DR Horton Earnings Call Summary
Earnings Call Date:Apr 17, 2025
(Q2-2025)
| % Change Since: 6.29%|
Next Earnings Date:Jul 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with strong financial performance, improved operational efficiencies, and stable cancellation rates as highlights. However, challenges such as decreased sales and order values, increased SG&A expenses, and lower gross profit margins were notable lowlights. The company's strategic focus on cash flow and shareholder returns indicates resilience in a challenging market environment.Q2-2025 Updates
Positive Updates
Strong Financial Performance
D.R. Horton reported earnings of $2.58 per diluted share with a consolidated pre-tax income of $1.1 billion on $7.7 billion of revenues, marking a solid financial performance for the second quarter of fiscal 2025.
Improved Cycle Times
Construction cycle times improved by a few days from the first quarter and approximately three weeks from a year ago, allowing for faster inventory turnover and increased operational efficiency.
Strong Cash Flow and Shareholder Returns
The company returned all generated cash to shareholders through repurchases and dividends, and plans to repurchase approximately $4 billion of common stock in fiscal 2025, more than double the amount in fiscal 2024.
Stable Cancellation Rates
Cancellation rates remained at the low end of the historical range at 16%, indicating stable buyer commitment despite economic volatility.
Increased Community Count
The average number of active selling communities was up 5% sequentially and 10% year-over-year, indicating geographic expansion and market penetration.
Negative Updates
Decrease in Sales and Order Value
Net sales orders and homebuilding revenues decreased by 15%, with order value decreasing by 17% to $8.4 billion due to affordability constraints and declining consumer confidence.
Decline in Average Closing Price
The average closing price for the quarter was $372,500, down 1% both sequentially and year-over-year, reflecting pricing pressures in the market.
Increased SG&A Expenses
Homebuilding SG&A expenses increased by 4% from last year, with SG&A as a percentage of revenues rising by 170 basis points due to platform expansion.
Lower Gross Profit Margins
Gross profit margin on home sales revenue was 21.8%, down 90 basis points sequentially due to higher incentive costs.
Company Guidance
During the second quarter of fiscal 2025, D.R. Horton reported earnings of $2.58 per diluted share, with consolidated revenues of $7.7 billion and a pre-tax profit margin of 13.8%. The company focused on enhancing capital efficiency, achieving a homebuilding pre-tax return on inventory of 24.3%, a return on equity of 17.4%, and a return on assets of 12.2%. Despite a 15% decrease in net sales orders and homebuilding revenues, the company maintained a gross margin of 21.8% on home sales by strategically balancing pace and price, with cancellation rates at the lower end of historical trends. D.R. Horton anticipates consolidated revenues between $8.4 billion and $8.9 billion and homes closed in the range of 22,000 to 22,500 for the third quarter, while expecting annual revenues between $33.3 billion and $34.8 billion. The company continues to manage its inventory efficiently, with plans to repurchase about $4 billion of its common stock in fiscal 2025.DR Horton Corporate Events
Private Placements and FinancingBusiness Operations and Strategy
DR Horton Enters Material Definitive Agreement
Neutral
May 10, 2025
DR Horton has entered into a material definitive agreement, which has implications for its financial obligations. The details of this agreement are expected to impact the company’s operations and may influence its market positioning, although specific implications for stakeholders are not detailed.
Spark’s Take on DHI Stock
According to Spark, TipRanks’ AI Analyst, DHI is a Outperform.
DR Horton’s strong financial performance, efficient cash flow management, and undervaluation are significant strengths. However, potential challenges in maintaining growth momentum and recent technical indicators suggest caution. The earnings call points to resilience, but decreased sales and increased expenses are areas to monitor.
To see Spark’s full report on DHI stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.