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DR Horton (DHI)
NYSE:DHI
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DR Horton
(NYSE:DHI)
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Rating:73Outperform
Price Target:
$171.00
▲(14.18% Upside)
The score is driven primarily by strong financial durability (low leverage and strong free cash flow) and a reasonable valuation. It is tempered by a cooling TTM revenue/margin profile and earnings-call commentary pointing to continued incentive pressure and near-term margin risk, while technical signals remain broadly neutral.
Positive Factors
Conservative Balance Sheet
Low leverage and a large equity base give D.R. Horton durable financial flexibility across housing cycles. This reduces refinancing and liquidity risk, supports sustained share repurchases/dividends, and enables disciplined land and starts decisions over the next several months.
Strong Cash Generation
High operating cash flow and near‑par FCF conversion to net income underpin quality earnings and provide self-funded capital for land, working capital and shareholder returns. This cash strength supports resilience and strategic optionality over the medium term.
Deep Lot Supply & Scale
A very large owned/controlled lot base plus rising active communities creates a multi-year production pipeline and geographic diversification. Controlled lots and faster cycle times improve capital efficiency and allow timing of starts to match demand, aiding durable returns.
Negative Factors
Revenue and Margin Downshift
A sustained downshift in revenue and margins versus the 2022–2024 peak reduces underlying earnings power and free cash flow growth. If the trend persists, it constrains capital allocation flexibility and pressures long‑term return metrics and shareholder distributions.
Elevated Incentives Compress Margins
Rising incentive spending, including interest-rate buy‑downs, is a structural margin headwind tied to mortgage rates and affordability. Persistent incentive needs can materially reduce gross margins and make profitability sensitive to rate-driven demand shifts over coming quarters.
High Inventory / Unsold Homes
Large unsold inventory ties up capital, elevates holding costs and increases exposure to slower local absorption. Prolonged inventory converts to greater reliance on incentives or price concessions, pressuring margins and cash conversion over the medium term.
DR Horton (DHI) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$43.12B
Dividend Yield1.14%
Average Volume (3M)2.89M
Price to Earnings (P/E)13.5
Beta (1Y)0.63
Revenue Growth-6.93%
EPS Growth-19.41%
CountryUS
Employees14,766
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)2.03
Shares Outstanding289,703,400
10 Day Avg. Volume3,095,862
30 Day Avg. Volume2,892,108
Financial Highlights & Ratios
PEG Ratio-0.75
Price to Book (P/B)2.16
Price to Sales (P/S)1.53
P/FCF Ratio15.92
Enterprise Value/Market Cap1.08
Enterprise Value/Revenue1.38
Enterprise Value/Gross Profit5.94
Enterprise Value/Ebitda10.39
Forecast
1Y Price Target
$160.58Price Target Upside7.22% Upside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 generates revenue primarily through the sale of newly constructed homes, which constitutes the bulk of its earnings. The company builds and sells homes across various price segments, allowing it to tap into a broad customer base. In addition to home sales, D.R. Horton operates a financial services segment that provides mortgage financing and title services, contributing to its revenue through service fees and interest income. The company also benefits from strategic partnerships with land developers and suppliers, which help streamline operations and reduce costs. Economic factors such as interest rates, housing demand, and demographic trends significantly influence its earnings, making its revenue model sensitive to market conditions.
DR Horton Key Performance Indicators (KPIs)
Any
Income Before Taxes by Segment
Shows the profitability of each business segment before tax, highlighting which areas are driving earnings and which may need strategic adjustments.
Shows the profitability of each business segment before tax, highlighting which areas are driving earnings and which may need strategic adjustments.
Data provided by:
The Fly
The FlyDR Horton Earnings Call Summary
Earnings Call Date:Jan 20, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Apr 21, 2026
Earnings Call Sentiment Neutral
Balanced / Neutral. The call presented several notable operational and financial strengths — strong cash generation, disciplined capital returns, robust lot supply, improving cycle times, and a 3% increase in net sales orders — which underscore the company's resilient platform. Offsetting these positives were meaningful near-term headwinds: EPS declined ~22% YoY, home closings and home sales revenues were down YoY, and margins are under pressure due to elevated incentives (with Q2 gross margin guidance at 19%–19.5%). Management emphasized discipline, liquidity ($6.6B), and targeted growth, but elevated incentives and lower average prices create margin risk in the near term. Overall, highlights and lowlights are relatively balanced.Q1-2026 Updates
Positive Updates
Strong Profitability and Pretax Margin
Consolidated pretax income of $798 million on $6.9 billion of revenues with a consolidated pretax profit margin of 11.6% for Q1 FY2026.
Solid Cash Generation and Capital Returns
Generated $3.6 billion of cash from operations over the trailing twelve months and consolidated cash provided by operations of $854 million in Q1. Returned $4.4 billion to shareholders over the past 12 months via repurchases and dividends; repurchased 4.4 million shares for $670 million in the quarter and paid $132 million in dividends.
Net Sales Orders Growth
Net sales orders increased 3% year-over-year to 18,300 homes while order value remained unchanged at $6.7 billion, demonstrating resilient demand and the ability to balance pace, price, and incentives.
Operational Efficiency Improvements
Median cycle time from home start to home close decreased by two weeks year-over-year, enabling faster turns and lower inventory duration; completed unsold homes declined by ~2,000 sequentially.
Expanded Market Footprint and Community Growth
Average active selling communities up 12% year-over-year (and up 2% sequentially), and starts in December were up 27% sequentially (18,500), positioning the company for growth into the spring selling season.
Strong Return Metrics
Trailing twelve months homebuilding pretax return on inventory was 18.6%; consolidated returns on equity and assets were 13.7% and 9.4% respectively, with ROA ranking in the top 20% of S&P 500 companies over 3/5/10-year periods.
Robust Lot Supply and Land Strategy
Homebuilding lot position of ~590,500 lots (25% owned, 75% controlled) and $2.0 billion invested in lots, land and development in Q1 ($1.3B finished lots, $610M development, $80M acquisition), supporting future production and capital efficiency.
Strong Financial Services & Forestar Performance
Financial services pretax income of $58 million on $185 million of revenues (31.4% pretax margin). Forestar reported Q1 revenues of $273 million on 1,944 lots with pretax income of $21 million and a 101,000 owned & controlled lot position (62% of Forestar owned lots under contract/ROFO to D.R. Horton).
Negative Updates
Decline in EPS and Net Income Pressure
Q1 GAAP diluted EPS decreased to $2.03 from $2.61 in the prior-year quarter (down ~22%). Net income was $595 million on consolidated revenues of $6.9 billion, reflecting margin and volume pressures.
Lower Home Closings and Revenues YoY
Home sales revenues were $6.5 billion on 17,818 homes closed versus $7.1 billion on 19,059 homes in the prior-year quarter — closings down ~6.5% and home sales revenues down roughly 8.5% year-over-year.
Average Sales Price Pressure
Average closing price was $365,500, flat sequentially but down 3% year-over-year; average price of net sales orders was $364,000, down 2% year-over-year, highlighting price sensitivity and mix toward lower price points.
Margin Headwinds and Elevated Incentives
Home sales gross margin reported at 20.4% in Q1 benefited from a one-time 40 basis point warranty recovery; excluding that benefit margin was 20.0%. Company expects Q2 home sales gross margin of 19.0%–19.5% as incentives increased and are expected to remain elevated through fiscal 2026. Incentives moved from high single-digit percent of sales toward low double-digit percent by quarter-end.
SG&A as a Percent of Revenue Increased
Homebuilding SG&A expense as a percentage of revenues rose to 9.7% from 8.9% year-over-year, primarily due to lower closings reducing operating leverage despite a 1% decline in absolute SG&A dollars.
Inventory and Unsold Homes
Ended the quarter with 30,400 homes in inventory, of which 20,000 were unsold (~66% of inventory). While completed unsold homes declined sequentially, 900 unsold homes have been completed for more than six months, indicating some pockets of slower absorption.
Downside Sensitivity to Incentives and Rates
Management noted that incentive levels — especially interest-rate buy-downs — materially impacted costs in Q1 and are a key driver of near-term margin volatility. Guidance does not assume further compression in incentive costs should mortgage rates fall.
Short-Term EPS/Volume Trade-offs
While the company reiterated substantial buybacks (~$2.5B guided for the year) and dividend plans, the combination of elevated incentives, lower average selling prices, and the need to manage closings cadence contributed to lower EPS and compressed near-term margins.
Company Guidance
D.R. Horton guided Q2 consolidated revenues of $7.3–$7.8 billion, homebuilding closings of 19,700–20,200 homes, a home‑sales gross margin of 19.0%–19.5% and a consolidated pretax profit margin of 10.6%–11.1%; for fiscal 2026 they reiterated consolidated revenues of about $33.5–$35.0 billion and homebuilding closings of 86,000–88,000, an expected tax rate of ~24.5%, operating cash flow of at least $3.0 billion, roughly $2.5 billion of share repurchases and about $500 million of dividends, while noting starts should be higher in Q2 than Q1, incentives are expected to remain elevated (dependent on demand and mortgage rates), and they plan to maintain leverage around ~20% (with $600 million of senior notes maturing in the next 12 months and ~$6.6 billion of consolidated liquidity at quarter end).DR Horton Financial Statement Overview
Summary
Strong overall fundamentals supported by a conservative balance sheet (low leverage, solid equity base) and robust cash generation with high FCF-to-net-income conversion. The main drag is a TTM downshift in revenue and margin structure versus the 2022–2024 peak, signaling a cooler near-term operating environment.Income Statement
TTM (Trailing-Twelve-Months) revenue is down (-2.12%) and profitability has compressed versus prior annual periods, with gross margin at ~18.5% and net margin at ~10.0% (both below the 2022–2024 range). Even with the step-down from peak cycle earnings, the company remains solidly profitable with healthy operating and EBITDA margins (~10.8% and ~13.6%), suggesting resilient underlying earnings power, but the near-term trajectory is weaker.72
Positive
Balance Sheet
Leverage is conservative for the sector, with TTM (Trailing-Twelve-Months) debt-to-equity around 0.23 and equity of ~$24.0B supporting a ~$34.6B asset base. Returns on equity remain strong (~14.7% TTM), though below the very elevated levels seen in 2021–2023, indicating profitability normalization rather than balance-sheet stress. Overall, the balance sheet appears well-positioned to manage housing-cycle volatility.86
Very Positive
Cash Flow
Cash generation is strong in TTM (Trailing-Twelve-Months), with operating cash flow of ~$3.63B and free cash flow of ~$3.48B, and free cash flow running close to net income (~0.97x), which supports earnings quality. Free cash flow growth is positive (~5.9% TTM), although cash flow has been more volatile across years (notably weaker conversion in 2021–2022), reflecting working-capital swings typical in homebuilding.78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 34.25B | 36.80B | 35.46B | 33.48B | 27.77B |
| Gross Profit | 8.12B | 9.54B | 9.35B | 10.50B | 7.88B |
| EBITDA | 4.84B | 6.37B | 6.41B | 7.71B | 5.43B |
| Net Income | 3.59B | 4.76B | 4.75B | 5.86B | 4.18B |
Balance Sheet | |||||
| Total Assets | 35.47B | 36.10B | 32.58B | 30.35B | 24.02B |
| Cash, Cash Equivalents and Short-Term Investments | 2.99B | 4.52B | 3.87B | 2.54B | 3.21B |
| Total Debt | 6.03B | 5.97B | 5.14B | 6.11B | 5.45B |
| Total Liabilities | 10.73B | 10.28B | 9.44B | 10.57B | 8.80B |
| Stockholders Equity | 24.19B | 25.31B | 22.70B | 19.40B | 14.89B |
Cash Flow | |||||
| Free Cash Flow | 3.28B | 2.02B | 4.16B | 413.60M | 267.00M |
| Operating Cash Flow | 3.42B | 2.19B | 4.30B | 561.80M | 534.40M |
| Investing Cash Flow | -168.70M | -190.60M | -310.20M | -414.90M | -252.20M |
| Financing Cash Flow | -4.76B | -1.36B | -2.67B | -811.20M | -85.10M |
DR Horton Technical Analysis
Negative
149.77
Price Trends
151.57
Negative
154.68
Negative
145.99
Positive
Market Momentum
-0.25
Positive
47.18
Neutral
21.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DHI, the sentiment is Negative. The current price of 149.77 is below the 20-day moving average (MA) of 152.28, below the 50-day MA of 151.57, and above the 200-day MA of 145.99, indicating a neutral trend. The MACD of -0.25 indicates Positive momentum. The RSI at 47.18 is Neutral, neither overbought nor oversold. The STOCH value of 21.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DHI.
DR Horton Risk Analysis
DR Horton disclosed 26 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 1 New Risks
1.
Changes in income tax and securities laws could adversely affect our business and financial results. Q3, 2025
DR Horton Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $13.73B | 10.71 | 16.89% | 0.70% | 1.11% | -10.03% | |
74 Outperform | $24.38B | 11.25 | 17.67% | 0.78% | 1.76% | -4.24% | |
73 Outperform | $43.12B | 13.51 | 13.63% | 1.14% | -6.93% | -19.41% | |
71 Outperform | $5.96B | 7.42 | 14.31% | ― | 6.98% | 9.74% | |
70 Outperform | $21.68B | 17.65 | 33.18% | ― | 3.61% | -6.94% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $26.76B | 13.69 | 8.26% | 1.91% | -3.78% | -44.21% |
* Consumer Cyclical Sector Average
DHI
DR Horton
149.77
13.93
10.25%
LEN
Lennar
108.80
-15.73
-12.63%
NVR
NVR
7,718.38
-19.12
-0.25%
PHM
PulteGroup
127.07
18.79
17.35%
TOL
Toll Brothers
145.48
15.13
11.60%
TMHC
Taylor Morrison
61.64
-1.24
-1.97%
DR Horton Corporate Events
Executive/Board ChangesShareholder Meetings
D.R. Horton Shareholders Reaffirm Board, Pay and Auditor
Positive
Jan 16, 2026
On January 15, 2026, D.R. Horton, Inc. held its Annual Meeting of Stockholders, where shareholders elected eight director nominees to serve until the 2027 annual meeting, indicating continued support for the company’s existing board composition and governance framework. Investors also approved the company’s executive compensation on an advisory basis and ratified Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending September 30, 2026, reinforcing continuity in leadership oversight and financial auditing practices that underpin the company’s operational and reporting stability.
The most recent analyst rating on (DHI) stock is a Hold with a $162.00 price target. To see the full list of analyst forecasts on DR Horton stock, see the DHI Stock Forecast page.
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.