D. R. Horton
DHI
$137.89
+1.71%
D.R. Horton Inc. is the largest homebuilder in the United States, operating across 126 markets in 36 states, primarily constructing single-family homes for entry-level, move-up, luxury, and active adult buyers, with additional financial services and rental operations. As the industry leader by volume, it holds a distinct competitive position through its scale, geographic diversification, and majority ownership of Forestar Group, a residential lot development company. The current investor narrative centers on the housing market's sensitivity to mortgage rates, which have been pressured by geopolitical tensions and inflation, while recent Berkshire Hathaway moves and cooling inflation have sparked debate about a potential housing recovery. D.R. Horton's stock has underperformed the broader market over the past year, reflecting concerns about affordability and demand, yet analysts remain cautiously optimistic about its long-term prospects.…
DHI
D. R. Horton
$137.89
Related headlines
Investment Opinion: Should I buy DHI Today?
Rating: Hold. DHI is a high-quality homebuilder with a strong balance sheet and attractive valuation, but the current revenue downturn and cautious analyst sentiment warrant patience. The average analyst target of $162.92 offers 14.1% upside, yet the consensus is only a 'hold' with a mean score of 2.61, reflecting uncertainty about the housing cycle's direction.
Sign up to view all
DHI 12-Month Price Forecast
The AI assessment is neutral with medium confidence. DHI's valuation is attractive, but the negative revenue trend and high beta suggest continued volatility. The stock is likely to trade in a range until there is clarity on mortgage rates and housing demand. A shift to bullish would require evidence of revenue stabilization and positive order growth, while a bearish stance would be triggered by accelerating declines and margin compression.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on D. R. Horton's 12-month outlook, with a consensus price target around $162.92 and implied upside of +18.1% versus the current price.
Average Target
$162.92
0 analysts
Implied Upside
+18.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$125 - $206
Analyst target range
D.R. Horton is covered by 12 analysts, with a consensus recommendation of 'hold' and a mean recommendation score of 2.61 (where 1 is strong buy and 5 is sell). The average target price is $162.92, implying an upside of 14.1% from the current price of $142.75. The distribution includes 2 buys, 7 holds, and 3 underperforms/sells, indicating a cautious stance, with recent actions from firms like Barclays (Equal Weight), Zelman & Assoc (upgraded to Outperform), and RBC Capital (Underperform) reflecting mixed sentiment.
Bulls vs Bears: DHI Investment Factors
D.R. Horton presents a classic cyclical value trap versus recovery play. The bear case is currently stronger given the confirmed revenue decline, negative price momentum, and cautious analyst stance. However, the bull case rests on compelling valuation (forward PE 12.1x), a fortress balance sheet, and potential catalysts from rate cuts and Berkshire's housing bet. The central tension is whether the housing downturn is a temporary cyclical dip or the start of a prolonged correction. If mortgage rates ease and demand stabilizes, DHI's low valuation and scale could drive significant upside; if the downturn deepens, the stock could test its 52-week low of $131.75.
Bullish
- Undervalued with 14% upside to target: The stock trades at $142.75, 22.6% below its 52-week high of $184.55, while the average analyst target of $162.92 implies a 14.1% upside. The forward PE of 12.13x is attractive for a company with a trailing net margin of 10.5%.
- Strong balance sheet and low debt: Debt-to-equity is only 0.25, and the current ratio is a robust 17.39, indicating ample liquidity. This financial strength provides flexibility to navigate housing downturns and potentially acquire distressed assets.
- Berkshire Hathaway signals housing recovery: Recent Berkshire moves, including the acquisition of Taylor Morrison, suggest a bullish bet on a housing market recovery. As the largest U.S. homebuilder, DHI is well-positioned to benefit from any rebound in demand.
- Scale and market leadership: Operating in 126 markets across 36 states, DHI's scale provides cost advantages and diversification. Its majority ownership of Forestar Group secures lot supply, a key competitive edge in a land-constrained environment.
Bearish
- Revenue declining for two quarters: Q2 FY2026 revenue fell 2.27% YoY to $7.558B, following a 10.9% drop in Q1. This marks two consecutive quarters of negative growth, signaling a deepening housing slowdown.
- Stock underperforming market sharply: DHI is down 19.21% over the past year versus the S&P 500's +18.65% gain. Relative strength is negative across all timeframes, with a 1-year relative strength of -37.86%, indicating persistent selling pressure.
- Analyst consensus is cautious: With a mean recommendation of 2.61 (hold) and only 2 buys out of 12 analysts, sentiment is tepid. The presence of 3 underperform/sell ratings highlights skepticism about near-term recovery.
- High sensitivity to mortgage rates: Beta of 1.371 shows high market correlation, and recent news links rising mortgage rates from geopolitical tensions to cooling housing demand. Higher rates directly pressure affordability and order volumes.
DHI Technical Analysis
D.R. Horton's stock is in a clear downtrend over the past year, with a 1-year price change of -19.21%, significantly underperforming the S&P 500's +18.65% gain. The current price of $142.75 sits at 27.2% of its 52-week range (between $131.75 low and $184.55 high), indicating the stock is trading near its lows, which could represent a value opportunity or a falling knife depending on the housing cycle. The stock has been range-bound between roughly $131 and $155 over the past six months, with the 52-week high of $184.55 set earlier in the period, and the current price is 22.6% below that high.
Beta
1.37
1.37x market volatility
Max Drawdown
-28.0%
Largest decline past year
52-Week Range
$132-$181
Price range past year
Annual Return
-23.8%
Cumulative gain past year
| Period | DHI Return | S&P 500 |
|---|---|---|
| 1m | -5.4% | -1.1% |
| 3m | -10.5% | +3.0% |
| 6m | -1.9% | +15.4% |
| 1y | -23.8% | +16.2% |
| ytd | -5.4% | +12.1% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
DHI Fundamental Analysis
D.R. Horton's revenue trajectory has turned negative, with the most recent quarter (Q2 FY2026, ended March 31, 2026) showing revenue of $7.558 billion, a 2.27% decline year-over-year, following a 10.9% drop in the prior quarter (Q1 FY2026) to $6.887 billion. The company's homebuilding segment generated $7.063 billion in revenue, while financial services contributed $192.8 million, rental $211.8 million, and Forestar Group $374.3 million, with eliminations of -$284 million. The multi-quarter trend shows a clear deceleration from the $9.678 billion in Q4 FY2025 and $9.226 billion in Q3 FY2025, indicating that the housing slowdown is deepening, with revenue now below year-ago levels for two consecutive quarters.
Quarterly Revenue
$7.6B
2026-03
Revenue YoY Growth
-2.3%
YoY Comparison
Gross Margin
22.5%
Latest Quarter
Free Cash Flow
$3.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is DHI Overvalued?
Given that D.R. Horton is profitable with a trailing net income of $647.9 million in the latest quarter, the primary valuation metric selected is the price-to-earnings (PE) ratio. The trailing PE is 14.58x, while the forward PE is 12.13x, implying that the market expects earnings growth of approximately 20% over the next year, which is optimistic given the current revenue decline. The gap between trailing and forward PE suggests that analysts anticipate a margin recovery or cost reductions, but this may be aggressive if the housing downturn persists.
PE
14.6x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 4x~18x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.4x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks center on DHI's revenue contraction, which has persisted for two consecutive quarters (Q1 FY2026: -10.9% YoY, Q2 FY2026: -2.27% YoY). This decline pressures operating leverage, as fixed costs like SG&A ($903M in Q2) remain sticky. While debt-to-equity is low at 0.25, the company's profitability is cyclical; net income fell from $1.02B in Q3 FY2025 to $648M in Q2 FY2026, a 36% drop. The negative PEG ratio (-0.75) reflects expected earnings declines, and the forward PE of 12.1x assumes a 20% earnings recovery that may not materialize if revenue keeps falling.
FAQ
The primary risk is financial: revenue has declined for two consecutive quarters, and if this continues, earnings and margins could compress further. Market risk is high, with a beta of 1.37, meaning DHI is more volatile than the market. Competitive risks include pressure from other builders and the need for incentives to drive sales. Macro risks are significant, as rising mortgage rates directly impact affordability; recent news highlights how geopolitical tensions have pushed rates higher. The most severe risk is a prolonged housing downturn, which could send the stock to the analyst low target of $125, a -12.4% loss from current levels.
The 12-month forecast is mixed. The bull case (30% probability) sees the stock rising to $162-$184 if mortgage rates fall and demand recovers. The base case (45% probability) expects a range of $145-$165, aligning with the average analyst target of $162.92. The bear case (25% probability) could see the stock drop to $125-$135 if the housing market weakens further. The most likely scenario is the base case, assuming the housing market stabilizes without major shocks. Investors should monitor quarterly earnings and mortgage rate trends for signs of which scenario is unfolding.
Based on trailing PE of 14.6x and forward PE of 12.1x, DHI is trading below the broader market average and its own historical norms. The PS ratio of 1.53x is also modest for a company with a 10.5% net margin. Compared to peers, DHI appears undervalued, but the market is pricing in continued earnings decline, as reflected in the negative PEG ratio. The valuation implies that investors expect a recovery in earnings, but not immediately. If the housing downturn persists, the stock could be fairly valued; if it recovers, the stock is cheap.
DHI offers a compelling risk/reward at current levels, with a forward PE of 12.1x and a 14.1% upside to the average analyst target of $162.92. However, the stock is in a downtrend, with revenue declining for two consecutive quarters. It could be a good buy for investors with a 12-month horizon who believe the housing market will stabilize, but it is not without risk. The biggest downside is a further drop to the 52-week low of $131.75, representing a -7.7% loss. For those willing to accept cyclicality, DHI's scale and balance sheet strength make it a relatively safer homebuilder investment.
DHI is better suited for long-term investors who can ride out cyclical downturns. The stock's high beta (1.37) and sensitivity to interest rates make it volatile for short-term trading. However, its strong balance sheet, low debt, and market leadership provide a margin of safety for patient investors. A minimum holding period of 3-5 years is recommended to allow the housing cycle to turn. Short-term traders might find opportunities in the current range, but the risk of further declines is significant. The dividend yield of 0.95% provides a small income cushion while waiting for appreciation.