Dream Finders Homes (DFH) AI Stock Analysis

• Market Cap: $2.12B
• Dividend Yield: N/A
• Average Volume (3M): 500.40K
• Price to Earnings (P/E): 7.0
• Beta (1Y): 2.47
• Revenue Growth: 18.74%
• EPS Growth: 13.43%
• Country: US
• Employees: 1,686
• Sector: Consumer Cyclical
• Sector Strength: 52
• Industry: Residential Construction
• EPS (TTM): 3.21
• Shares Outstanding: 35,710,850
• 10 Day Avg. Volume: 421,460
• 30 Day Avg. Volume: 500,398
• PEG Ratio: 0.52
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.49
• Price to Cash Flow (P/CF): 1.80
• P/FCF Ratio: 1.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $32.00
• Price Target Upside: 41.84% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1

Dream Finders Homes shows strong revenue growth and financial stability, supported by strategic expansion through acquisitions. However, challenges in cash flow management and bearish technical indicators temper the overall outlook. Despite an attractive valuation, the company must address liquidity and profitability pressures to sustain long-term growth.

Positive Factors

Acquisitions

DFH completed the acquisition of Jet HomeLoans for $9.3mm and expects this transaction to enhance overall profitability and drive significant shareholder value.

Financial Model

DFH's asset-light model will support a higher return-on-tangible equity (~30%) relative to the other homebuilders.

Market Expansion

DFH continues to expand across its platform: DFH’s controlled lot pipeline grew 46% yr/yr to ~45K.

Negative Factors

Earnings Miss

DFH reported 2Q EPS of $0.81 that was below our $0.85 forecast, but ahead of consensus of $0.77.

Regional Performance

Orders outperformed in Mid-Atlantic and Midwest and slowed in the Southeast (-10% YoY).

Revenue Miss

Home sales revenue of $986M missed the $1.03B estimate on 87 (4%) fewer units delivered.

Dream Finders Homes Business Overview & Revenue Model

Company Description

Dream Finders Homes (DFH) is a leading national homebuilder based in the United States, specializing in the design and construction of high-quality, customizable homes. The company operates across various regions, offering a diverse portfolio of residential properties, including single-family homes and townhouses. Dream Finders Homes is committed to delivering exceptional value, innovative designs, and personalized customer experiences in the homebuilding sector.

How the Company Makes Money

Dream Finders Homes generates revenue primarily through the sale of newly constructed residential properties. The company's key revenue streams include the building and selling of single-family homes, townhomes, and other residential properties. DFH benefits from economies of scale by purchasing materials in bulk and optimizing construction processes to reduce costs. Additionally, the company enhances its earnings by offering customization options and upgrades to homebuyers, which often come with additional fees. Strategic partnerships with suppliers and subcontractors, along with the company's focus on high-demand geographic markets, further contribute to its financial performance.

Dream Finders Homes Financial Statement Overview

Summary

Dream Finders Homes has achieved remarkable revenue growth and improved financial stability, with a stronger equity position and reduced leverage. However, the company faces challenges in cash flow management, as indicated by negative operating and free cash flows in 2024. While profitability metrics like EBIT margin are strong, the net profit margin has contracted slightly. The financial statements suggest a need for prudent cash management to support sustained growth.

Income Statement

Dream Finders Homes has demonstrated robust revenue growth, with a significant increase from $744 million in 2019 to $4.45 billion in 2024. The company's gross profit margin is exceptionally high at 100% in 2024, which is atypical and suggests potential data anomalies. Despite the impressive revenue growth, net profit margin decreased from 7.0% in 2023 to 7.5% in 2024, indicating some pressure on profitability. EBIT margin is strong at 91.1%, showcasing efficiency in operations. However, EBITDA is reported as zero in 2024, which may raise concerns about cash flow generation abilities.

Balance Sheet

The balance sheet shows improvement in equity, with stockholders' equity increasing from $37.7 million in 2021 to $1.24 billion in 2024. The debt-to-equity ratio has decreased significantly from 7.55 in 2019 to 0.25 in 2024, reflecting reduced leverage and enhanced financial stability. Return on Equity (ROE) is solid at 26.9% for 2024, indicating effective use of equity to generate profits. However, the equity ratio stands at a moderate 37.4%, suggesting room for improvement in asset utilization.

Cash Flow

Operating cash flow turned negative in 2024 at -$256.6 million, down from $374.2 million in 2023, raising concerns about liquidity management. Free cash flow also declined to -$282 million in 2024, from a positive $369.5 million in 2023. The free cash flow to net income ratio is negative, indicating challenges in converting profits into cash. The operating cash flow to net income ratio is also negative, further highlighting cash flow issues despite profitability.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.45B	3.75B	3.34B	1.92B	1.13B
	Gross Profit
828.58M	736.77M	620.20M	313.58M	170.88M
	EBIT
432.83M	427.98M	350.15M	153.81M	77.41M
	EBITDA
450.05M	445.87M	367.24M	163.66M	98.15M
	Net Income Common Stockholders
335.34M	295.90M	262.31M	122.38M	79.09M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
274.38M	548.46M	364.53M	227.23M	35.50M
	Total Assets
3.33B	2.56B	2.37B	1.89B	733.68M
	Total Debt
313.20M	845.42M	990.91M	783.26M	334.29M
	Net Debt
38.81M	351.27M	626.38M	556.03M	298.79M
	Total Liabilities
1.91B	1.48B	1.73B	1.49B	597.89M
	Stockholders Equity
1.24B	1.07B	631.68M	377.08M	103.85M
Cash Flow		Free Cash Flow
-281.99M	369.45M	-33.17M	62.33M	92.42M
	Operating Cash Flow
-256.65M	374.23M	-27.62M	65.11M	95.34M
	Investing Cash Flow
-221.67M	-4.48M	-5.52M	-523.04M	-13.03M
	Financing Cash Flow
269.69M	-216.42M	146.96M	645.88M	-65.83M

Dream Finders Homes Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.56
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DFH, the sentiment is Negative. The current price of 22.56 is below the 20-day moving average (MA) of 24.17, below the 50-day MA of 23.43, and below the 200-day MA of 28.16, indicating a bearish trend. The MACD of -0.19 indicates Positive momentum. The RSI at 41.46 is Neutral, neither overbought nor oversold. The STOCH value of 9.61 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DFH.

Dream Finders Homes Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PHM	74 Outperform	$20.72B	7.00	27.40%	0.80%	11.74%	25.66%
MTH	73 Outperform	$5.09B	6.61	16.12%	2.13%	4.18%	7.50%
TMHC	73 Outperform	$6.10B	7.25	15.80%	―	10.11%	19.06%
DFH	68 Neutral	$2.12B	7.03	27.19%	―	18.74%	13.43%
KBH	66 Neutral	$4.15B	7.09	15.60%	1.73%	5.54%	11.25%
Sector *	59 Neutral	$12.17B	11.04	-1.10%	3.77%	1.26%	-19.70%
LGIH	45 Neutral	$1.56B	8.00	10.07%	―	-6.61%	-1.56%

Dream Finders Homes Corporate Events

Dream Finders Homes Expands with Liberty Communities Acquisition

On January 23, 2025, Dream Finders Homes announced the completion of its acquisition of the majority of homebuilding assets from Liberty Communities, LLC, a privately held homebuilder in Atlanta and Greenville. This strategic move enables Dream Finders to enter the Atlanta market, one of the largest and fastest-growing in the U.S., enhancing their community count and land supply in Greenville. The acquisition also includes Liberty’s offsite manufacturing and component import businesses, providing cost and operational efficiencies, and positioning Dream Finders for further market expansion. The transaction was funded through cash on hand and borrowings, with DFH simultaneously settling Liberty’s vertical credit lines.