DR Horton (DHI) AI Stock Analysis

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DR Horton

(NYSE:DHI)

Rating:81Outperform

Price Target:

$143.00

▲(8.42%Upside)

D.R. Horton's strong financial performance and attractive valuation are key strengths, supported by efficient operations and robust cash flow management. The neutral technical indicators and mixed earnings call, with both highlights and challenges, moderate the overall score.

Positive Factors

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.

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

Earnings performance

D.R. Horton reported earnings below expectations, with weaker deliveries and higher SG&A offsetting better gross margin.

Margin pressures

Higher incentives and SG&A pressure the margin outlook, with a decline in gross margin expected.

Market challenges

Spring selling season started slower than expected due to affordability challenges and weak consumer confidence.

DR Horton (DHI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$40.52B

Dividend Yield1.21%

Average Volume (3M)3.32M

Price to Earnings (P/E)10.0

Beta (1Y)0.81

Revenue Growth-4.71%

EPS Growth-10.19%

CountryUS

Employees14,766

SectorConsumer Cyclical

Sector Strength61

IndustryResidential Construction

Share Statistics

EPS (TTM)2.58

Shares Outstanding307,181,300

10 Day Avg. Volume3,913,583

30 Day Avg. Volume3,317,187

Financial Highlights & Ratios

PEG Ratio-1.36

Price to Book (P/B)1.60

Price to Sales (P/S)0.00

P/FCF Ratio13.91

Enterprise Value/Market Cap1.04

Enterprise Value/Revenue0.29

Enterprise Value/Gross Profit4.69

Enterprise Value/Ebitda1.76

Forecast

1Y Price Target

$142.18

Price Target Upside7.79% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering11

DR Horton Business Overview & Revenue Model

Company DescriptionD.R. Horton, Inc. (DHI) is a leading homebuilding company in the United States, operating across several states. The company primarily focuses on constructing and selling residential homes, including single-family detached homes, townhomes, duplexes, and condominiums. Founded in 1978 and headquartered in Arlington, Texas, D.R. Horton is recognized for its commitment to quality, value, and customer service, which has helped it establish a strong presence in the homebuilding industry.

How the Company Makes MoneyD.R. Horton makes money primarily through the construction and sale of residential homes. The company's revenue model relies heavily on its core homebuilding operations, which involve acquiring land, developing home sites, and building homes to sell to consumers. Key revenue streams include the sale of completed homes, land sales, and the provision of mortgage financing services through its subsidiary, DHI Mortgage. Additionally, the company may form strategic partnerships with land developers and other real estate entities to enhance its market reach and operational efficiency. D.R. Horton's earnings are influenced by factors such as housing market conditions, economic trends, interest rates, and consumer demand.

DR Horton Key Performance Indicators (KPIs)

Any

Homebuilding Inventories by Geography

Homebuilding Inventories by Geography
Tracks the inventory levels of homes in different regions, offering insights into supply-demand dynamics and potential sales opportunities or challenges.

Chart InsightsD.R. Horton's inventory levels have notably increased in the North and East regions, reflecting strategic geographic expansion and market penetration, as highlighted by a 10% year-over-year increase in active selling communities. Despite a 15% decrease in net sales orders, the company maintains strong financial performance and operational efficiencies, with improved cycle times and stable cancellation rates. The focus on cash flow and shareholder returns, including significant stock repurchases, underscores resilience amid market challenges such as affordability constraints and increased SG&A expenses.

Data provided by:

Main Street Data

DR Horton Earnings Call Summary

Earnings Call Date:Apr 17, 2025

(Q2-2025)

% Change Since: 12.22%|

Next Earnings Date:Jul 22, 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 Financial Statement Overview

Summary

D.R. Horton demonstrates strong profitability with efficient cost management, reflected in high gross and net profit margins. The balance sheet is solid with low leverage, and cash flow management is robust. However, a decline in revenue growth poses a challenge for maintaining momentum.

Income Statement

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Very Positive

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.

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
EBITDA	5.55B	6.37B	6.19B	7.65B	5.40B	2.91B
Net Income	4.29B	4.76B	4.75B	5.86B	4.18B	2.37B
Balance Sheet
Total Assets	35.69B	36.10B	32.58B	30.35B	24.02B	18.91B
Cash, Cash Equivalents and Short-Term Investments	2.47B	4.54B	3.87B	2.54B	3.21B	3.02B
Total Debt	6.57B	5.97B	5.09B	6.07B	5.41B	4.28B
Total Liabilities	10.83B	10.28B	9.44B	10.57B	8.80B	6.79B
Stockholders Equity	24.33B	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

Technical Analysis Sentiment

Positive

Last Price131.90

Price Trends

50DMA

124.22

Positive

100DMA

125.50

Positive

200DMA

144.14

Negative

Market Momentum

MACD

2.65

Negative

RSI

59.46

Neutral

STOCH

81.88

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DHI, the sentiment is Positive. The current price of 131.9 is above the 20-day moving average (MA) of 126.40, above the 50-day MA of 124.22, and below the 200-day MA of 144.14, indicating a neutral trend. The MACD of 2.65 indicates Negative momentum. The RSI at 59.46 is Neutral, neither overbought nor oversold. The STOCH value of 81.88 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DHI	81 Outperform	$40.52B	9.98	17.83%	1.21%	-4.71%	-10.19%
PHM	80 Outperform	$21.92B	7.71	25.52%	0.80%	8.86%	13.60%
TOL	78 Outperform	$11.56B	8.74	18.09%	0.85%	1.59%	-8.04%
TMHC	78 Outperform	$6.37B	7.38	15.97%	―	12.19%	23.15%
NVR	76 Outperform	$22.29B	15.69	38.25%	―	8.81%	1.79%
LEN	72 Outperform	$28.38B	9.10	13.04%	1.82%	-1.26%	-17.78%
Sector *	64 Neutral	kr11.54B	16.57	10.84%	9.89%	2.66%	5.01%

* Consumer Cyclical Sector Average

Performance Comparison

DHI

DR Horton

131.90

-3.33

-2.46%

LEN

Lennar

110.12

-24.84

-18.41%

NVR

7,623.24

169.18

2.27%

PHM

PulteGroup

109.36

4.90

4.69%

TOL

Toll Brothers

117.79

7.71

7.00%

TMHC

Taylor Morrison

63.45

9.62

17.87%

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.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jun 21, 2025