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D.R. Horton Inc (DHI)
:DHI
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DR Horton
(NYSE:DHI)78Outperform
Positive Factors
Cash Returns
Positively, DHI is returning cash through dividends (+33% in F4Q) & repurchases (guided +34% Y/Y to $2.4B results).
Financial Management
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.
Negative Factors
Earnings
DHI reported F4Q EPS of $3.92 per share, below our $4.33 estimate ($4.17 consensus).
DR Horton (DHI) vs. S&P 500 (SPY)
Market Cap
$39.68B
Dividend Yield1.11%
Average Volume (3M)3.82M
Price to Earnings (P/E)8.9
Beta (1Y)1.19
Revenue Growth2.12%
EPS Growth1.63%
CountryUS
Employees14,766
SectorConsumer Cyclical
Sector Strength53
IndustryResidential Construction
Share Statistics
EPS (TTM)14.15
Shares Outstanding315,122,500
10 Day Avg. Volume4,033,304
30 Day Avg. Volume3,815,676
Financial Highlights & Ratios
PEG Ratio5.45
Price to Book (P/B)N/A
Price to Sales (P/S)1.08
Price to Cash Flow (P/CF)15.30
P/FCF Ratio15.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$167.15Price Target Upside29.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
DR Horton Business Overview & Revenue Model
Company DescriptionFounded in 1978, Texas-based D.R. Horton, Inc. is a homebuilding company that is engaged in the construction and sale of single-family homes through its diverse brand portfolio that includes D.R. Horton, Emerald Homes, Express Homes and Freedom Homes.
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
DHI showcases a strong financial position with robust profitability, high equity ratios, and solid cash flows. The company is well-positioned in the residential construction industry, though slight fluctuations in revenue and free cash flow growth warrant attention for future periods. Overall, DHI presents a stable investment opportunity with effective risk management and operational efficiency.Income Statement
DHI demonstrates strong profitability with a consistent gross profit margin in the range of 40% and a net profit margin of around 12.7% for the TTM period. Revenue growth shows stability with a TTM increase and a healthy EBIT margin of 31.6%. However, the slight dip in revenue for the TTM compared to the previous year suggests a need for cautious optimism.85
Very Positive
Balance Sheet
The company's balance sheet reflects a robust equity position with an equity ratio of 72.7%, indicating high financial stability. The debt-to-equity ratio is low at 0.20, reflecting conservative leverage. ROE is strong at 18.3% for the TTM, underscoring effective management of equity to generate profits. These factors combined suggest high stability and low risk.88
Very Positive
Cash Flow
DHI's cash flow statement reveals a solid operating cash flow to net income ratio, indicating efficient cash generation from operations. However, free cash flow growth has been volatile, with a decrease in the TTM. Despite this, the company maintains a healthy free cash flow to net income ratio, ensuring sufficient cash availability for strategic investments.78
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 36.69B | 36.80B | 35.46B | 33.48B | 27.77B | 20.31B | Gross Profit |
| 9.44B | 9.54B | 9.35B | 10.50B | 7.88B | 4.94B | EBIT |
| 4.74B | 5.94B | 6.42B | 7.57B | 5.32B | 2.83B | EBITDA |
| 5.97B | 6.37B | 6.19B | 7.65B | 5.40B | 2.91B | Net Income Common Stockholders |
| 4.65B | 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 | 5.92B | 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 | ||||
| 2.87B | 2.02B | 4.16B | 413.60M | 267.00M | 1.13B | Operating Cash Flow |
| 2.99B | 2.19B | 4.30B | 561.80M | 534.40M | 1.42B | Investing Cash Flow |
| -208.40M | -190.60M | -310.20M | -414.90M | -252.20M | -166.10M | Financing Cash Flow |
| -3.06B | -1.36B | -2.67B | -811.20M | -85.10M | 270.60M |
DR Horton Technical Analysis
Neutral
129.37
Price Trends
136.41
Negative
152.32
Negative
159.12
Negative
Market Momentum
-3.32
Negative
45.59
Neutral
32.54
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 129.37 is above the 20-day moving average (MA) of 129.22, below the 50-day MA of 136.41, and below the 200-day MA of 159.12, indicating a neutral trend. The MACD of -3.32 indicates Negative momentum. The RSI at 45.59 is Neutral, neither overbought nor oversold. The STOCH value of 32.54 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 (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $39.68B | 8.90 | 19.35% | 1.11% | 2.12% | 1.63% | |
75 Outperform | $4.38B | 7.19 | 16.52% | 1.65% | 8.10% | 20.03% | |
74 Outperform | $20.83B | 7.00 | 27.40% | 0.80% | 11.74% | 25.66% | |
69 Neutral | $10.75B | 7.44 | 20.38% | 0.85% | 5.86% | 12.20% | |
67 Neutral | $31.26B | 8.30 | 14.30% | 1.68% | 3.47% | 4.22% | |
66 Neutral | $21.54B | 14.19 | 39.95% | ― | 10.81% | 10.16% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
DHI
DR Horton
129.37
-21.13
-14.04%
KBH
KB Home
61.95
-5.53
-8.20%
LEN
Lennar
122.03
-30.68
-20.09%
NVR
NVR
7,387.79
-321.48
-4.17%
PHM
PulteGroup
105.97
-4.71
-4.26%
TOL
Toll Brothers
110.49
-6.83
-5.82%
DR Horton Earnings Call Summary
Earnings Call Date: Jan 21, 2025 | % Change Since: -12.12% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced sentiment with both solid financial performance and shareholder returns alongside challenges such as declining earnings per share, decreased net sales orders, and higher SG&A expenses. The company is focusing on improving efficiencies and navigating market challenges.Highlights
Solid Financial Performance
Earnings per diluted share for the first quarter were $2.61. Consolidated pretax income was $1.1 billion on $7.6 billion of revenues with a pretax profit margin of 14.6%.
Strong Shareholder Returns
Returned $1.2 billion to shareholders through share repurchases and dividends over the past 12 months.
Improved Construction Cycle Times
Construction cycle times improved by approximately 3 weeks from a year ago, positioning the company to turn housing inventory faster in 2025.
Forestar Performance
Forestar reported revenues of $250 million for the first quarter on 2,333 lots sold with pretax income of $22 million.
Strong Financial Services Performance
Financial Services earned $49 million of pretax income in the first quarter on $182 million of revenues, resulting in a pretax profit margin of 26.7%.
Lowlights
Decline in Earnings Per Share
Earnings for the first quarter of fiscal 2025 decreased 7% to $2.61 per diluted share compared to $2.82 per share in the prior year quarter.
Decrease in Net Sales Orders
Net sales orders for the first quarter decreased 1% from the prior year to 17,837 homes.
Higher SG&A Expenses
Homebuilding SG&A expenses increased by 6% from last year, with SG&A expense as a percentage of revenues at 8.9%, up 60 basis points.
Higher Incentive Costs Impacting Margins
Gross profit margin on home sales revenue in the first quarter was 22.7%, down 90 basis points sequentially due to higher incentive costs. Incentive costs are expected to increase, impacting future margins.
Challenging Rental Market
Rental operations generated $12 million of pretax income on $218 million of revenues, with profit margin impacted by recent uncertainty in capital markets and higher interest rates.
Company Guidance
During the first quarter 2025 earnings call for D.R. Horton, the company provided guidance with several key metrics. The executives projected consolidated revenues for the second quarter to range between $7.7 billion and $8.2 billion, with home closings anticipated to be within 20,000 to 20,500 units. They also forecasted a home sales gross margin between 21.5% and 22% and a consolidated pretax profit margin ranging from 13.7% to 14.2%. For the full fiscal year 2025, D.R. Horton expects revenues of approximately $36 billion to $37.5 billion and home closings between 90,000 to 92,000 units. Additionally, the company plans to repurchase $2.6 billion to $2.8 billion of its common stock and maintain annual dividend payments around $500 million, supported by an income tax rate projection of about 24%.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.