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DR Horton (DHI)
NYSE:DHI
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DR Horton (DHI) AI Stock Analysis

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DHI

DR Horton

(NYSE:DHI)

Rating:79Outperform
Price Target:
$149.00
▲(1.92%Upside)
D.R. Horton scores well due to strong financial performance and effective market strategies, despite headwinds in revenue and increased sales incentives. The stock shows positive technical momentum but is approaching overbought levels. Valuation is fair, providing a balanced investment opportunity.
Positive Factors
Earnings Performance
D.R. Horton reported stronger deliveries and margins, driving better-than-expected earnings.
Market Positioning
Demand was choppy, but D.R. Horton could be positioned to grow due to higher exposure to smaller markets and community count growth.
Revenue and Gross Margin Outlook
D.R. Horton's outlook for revenue and gross margin was better than expected, despite the challenging housing market.
Negative Factors
Margin Outlook
Higher incentives and SG&A pressure the margin outlook, with a decline in gross margin expected.
Rental Business Impact
DHI guided to year-over-year pre-tax margin compression driven by margin compression in the company’s rental business, given higher cap rates for single-family and multifamily rental sales.
Valuation Concerns
Valuation could limit upside potential from current levels, as the stock currently trades at a higher price-to-book ratio compared to the average builder.

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

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
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:Jul 22, 2025
(Q3-2025)
|
% Change Since: 11.42%|
Next Earnings Date:Oct 28, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with several positive achievements, such as strong earnings and shareholder returns, counterbalanced by challenges like decreased home sales revenue and increased sales incentives. The company's proactive management of its community count and investments indicates a strategically adaptive approach to market conditions.
Q3-2025 Updates
Positive Updates
Solid Earnings for Third Quarter 2025
D.R. Horton reported earnings of $3.36 per diluted share, with a consolidated pre-tax income of $1.4 billion on $9.2 billion in revenues. The pre-tax profit margin stood at 14.7%.
Strong Cash Flow and Shareholder Returns
Generated $2.9 billion in cash from operations over the past twelve months and returned $4.6 billion to shareholders through repurchases and dividends.
Increased Community Count and Market Expansion
The average number of active selling communities increased by 4% sequentially and 12% year over year, with market count up 4% to 126 markets in 36 states.
Successful Homebuilding and Rental Operations
Homebuilding operations closed 23,160 homes, and rental operations generated $55 million of pre-tax income on $381 million of revenues from the sale of single-family and multifamily rental units.
Negative Updates
Decrease in Home Sales Revenue and Average Closing Price
Third quarter home sales revenues were $8.6 billion, down from $9.2 billion in the prior year, with the average closing price down 3% year over year to $369,600.
Increased Sales Incentives and Lower Gross Margin Expectations
Sales incentives increased to drive traffic and sales, leading to expectations of lower gross margins in the fourth quarter compared to the third quarter.
Higher Homebuilding SG&A Expenses
SG&A expenses increased by 2%, with SG&A as a percentage of revenues up by 70 basis points from the prior year.
Inventory Impairments and Write-offs
Incurred $16 million in inventory impairments and wrote off $36 million in option deposits and due diligence costs related to land and lot purchase contracts.
Company Guidance
During the third quarter of fiscal 2025, D.R. Horton reported earnings of $3.36 per diluted share, with consolidated pre-tax income at $1.4 billion on revenues of $9.2 billion, yielding a pre-tax profit margin of 14.7%. The company closed 23,160 homes, achieving a home sales gross margin of 21.8%, which exceeded expectations. Despite facing ongoing affordability constraints and cautious consumer sentiment, D.R. Horton's net sales orders remained flat year-over-year and increased 3% sequentially. The company's cancellation rate was 17%, stable compared to historical ranges. Over the trailing twelve months, D.R. Horton generated $2.9 billion in cash from operations and returned $4.6 billion to shareholders. The company maintained a strong balance sheet with $5.5 billion in liquidity and a leverage ratio of 23.2%. Looking forward, D.R. Horton expects fourth-quarter revenues between $9.1 billion to $9.6 billion, with a home sales gross margin ranging from 21% to 21.5% and a consolidated pre-tax profit margin of 13.6% to 14.1%. The company plans to close between 23,500 to 24,000 homes in the fourth quarter and aims to repurchase $4.2 billion to $4.4 billion of common stock in fiscal 2025.

DR Horton Financial Statement Overview

Summary
D.R. Horton demonstrates strong profitability and financial stability with solid margins and cash flow growth, despite a revenue decline. The company maintains effective cost management and cash flow generation.
Income Statement
78
Positive
DR Horton shows strong profitability with a gross profit margin of 24.8% and a net profit margin of 11.5% for TTM. However, there's a revenue decline of 6.1% from the previous annual period, which tempers the positive margins. The EBIT margin is robust at 14.1%, and EBITDA margin stands at 15.2%, indicating efficient operations despite the revenue dip.
Balance Sheet
84
Very Positive
The debt-to-equity ratio of 0.30 suggests a solid capital structure with moderate leverage. Return on Equity (ROE) is strong at 16.5%, and the equity ratio is high at 66.1%, reflecting financial stability and a strong equity base.
Cash Flow
82
Very Positive
Free cash flow shows a substantial growth rate of 38.3% in TTM, indicating improved cash generation. The operating cash flow to net income ratio is 0.73, suggesting effective conversion of earnings into cash flow. The free cash flow to net income ratio is 0.71, underlining robust cash flow management.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue36.80B35.46B33.48B27.77B20.31B
Gross Profit9.54B9.35B10.50B7.88B4.94B
EBITDA6.37B6.19B7.65B5.40B2.91B
Net Income4.76B4.75B5.86B4.18B2.37B
Balance Sheet
Total Assets36.10B32.58B30.35B24.02B18.91B
Cash, Cash Equivalents and Short-Term Investments4.54B3.87B2.54B3.21B3.02B
Total Debt5.97B5.09B6.07B5.41B4.28B
Total Liabilities10.28B9.44B10.57B8.80B6.79B
Stockholders Equity25.31B22.70B19.40B14.89B11.84B
Cash Flow
Free Cash Flow2.02B4.16B413.60M267.00M1.13B
Operating Cash Flow2.19B4.30B561.80M534.40M1.42B
Investing Cash Flow-190.60M-310.20M-414.90M-252.20M-166.10M
Financing Cash Flow-1.36B-2.67B-811.20M-85.10M270.60M

DR Horton Technical Analysis

Technical Analysis Sentiment
Positive
Last Price146.20
Price Trends
50DMA
128.46
Positive
100DMA
127.06
Positive
200DMA
139.96
Positive
Market Momentum
MACD
4.85
Negative
RSI
62.84
Neutral
STOCH
64.98
Neutral
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 146.2 is above the 20-day moving average (MA) of 136.88, above the 50-day MA of 128.46, and above the 200-day MA of 139.96, indicating a bullish trend. The MACD of 4.85 indicates Negative momentum. The RSI at 62.84 is Neutral, neither overbought nor oversold. The STOCH value of 64.98 is Neutral, 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$43.59B11.7216.27%1.03%-7.31%-16.37%
79
Outperform
$22.94B16.5638.10%6.29%-1.74%
78
Outperform
$23.05B8.7323.05%0.74%5.04%2.07%
78
Outperform
$12.11B9.1518.09%0.78%1.59%-8.04%
74
Outperform
$6.00B7.0115.59%13.77%28.57%
73
Outperform
$29.94B9.6013.04%1.71%-1.26%-17.78%
63
Neutral
$17.26B10.39-8.50%3.06%1.63%-25.95%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DHI
DR Horton
146.20
-32.98
-18.41%
LEN
Lennar
116.14
-54.60
-31.98%
NVR
NVR
7,845.30
-816.68
-9.43%
PHM
PulteGroup
116.82
-15.35
-11.61%
TOL
Toll Brothers
123.32
-18.62
-13.12%
TMHC
Taylor Morrison
60.59
-7.49
-11.00%

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: Jul 25, 2025