D. R. Horton
DHI
$147.48
-0.12%
D.R. Horton is the largest homebuilder in the United States, operating in 126 markets across 36 states and generating over 90% of home sales revenue from single-family homes targeted at entry-level, move-up, luxury, and active-adult buyers, supplemented by a financial services segment (mortgage financing and title agency) and a majority-owned stake in publicly traded lot developer Forestar Group. Its scale, low-cost land-light operating model, and entry-level price point give it a distinct cost-leadership identity in a highly fragmented residential construction industry, where it consistently out-closes peers on unit volume. The current investor narrative is dominated by a housing affordability crisis: mortgage rates have pushed above 7% on surging Treasury yields, pressuring buyer traffic and forcing builders to lean on incentives and rate buydowns, which has compressed gross margins from the mid-25% range in 2024 toward the low-23% range in the most recent quarter. Against that backdrop, the debate centers on whether D.R. Horton's near-flat revenue growth and shrinking profitability mark a cyclical trough that value-oriented buyers (including Berkshire Hathaway's aggressive expansion into housing via the Taylor Morrison acquisition and a large Lennar stake) are positioning for, or the early stage of a deeper downturn.…
DHI
D. R. Horton
$147.48
Related headlines
DHI 12-Month Price Forecast
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 $152.36 and implied upside of +3.3% versus the current price.
Average Target
$152.36
0 analysts
Implied Upside
+3.3%
vs. current price
Analyst Count
—
covering this stock
Price Range
$119 - $206
Analyst target range
Coverage is broad but cautious: 14 analysts cover DHI, and the consensus recommendation is "hold" with a mean rating of 2.75 (where 1 is strong buy and 5 is strong sell). The average target price of $153.29 implies roughly +10.0% upside from the current $139.39, a modest expected return that is consistent with a neutral stance. The consensus leans neutral-to-slightly-bearish rather than bullish — the hold rating reflects genuine uncertainty about the housing cycle rather than indifference, and the estimated FY EPS average of $20.18 (range $19.37 to $21.25) and revenue average of $43.91 billion (range $42.56 billion to $45.70 billion) suggest analysts expect flat-to-modestly-lower results versus the prior year.
The target range is wide, from a low of $119.00 to a high of $206.00 — a spread of $87, or 62% of the current price — which signals high uncertainty and low conviction. The high target of $206 would require roughly 48% upside and likely assumes a sharp drop in mortgage rates, a housing recovery, and multiple re-rating toward the upper end of DHI's historical PE band; the low target of $119 implies about -15% downside and prices in continued margin compression and volume deterioration if rates stay elevated. Recent institutional actions show a mixed-to-cautious pattern: Zelman & Assoc upgraded to Outperform from Neutral in July 2026, but RBC Capital maintained Underperform, and Evercore ISI, Keefe Bruyette & Woods, Truist, Wells Fargo, and Barclays all reiterated neutral/equal-weight/market-perform stances through September 2026 — no firm has moved to a strong buy, and the absence of upgrades alongside the wide target spread confirms that analysts see limited near-term catalysts and are waiting for rate relief before turning constructive.
Bulls vs Bears: DHI Investment Factors
The bear case currently holds the stronger evidence: revenue is flat at 0.02% YoY, gross margin has compressed roughly 230bps over two years, EPS is declining, and the stock has underperformed the S&P 500 by 24.4 points over one year. The bull case rests on balance-sheet strength (0.249 debt-to-equity, $3.3 billion TTM FCF), aggressive buybacks cutting share count 11.6%, and a valuation near tangible book that already discounts much of the pain. The single most important tension is whether mortgage rates above 7% represent a cyclical peak that will reverse, unlocking pent-up entry-level demand, or the start of a deeper affordability-driven downturn. If rates fall, DHI's volume leadership and low-cost model would drive sharp operating leverage; if rates stay elevated, margin compression likely continues and the $130.40 low comes into play.
Bullish
- Fortress balance sheet with minimal leverage: Debt-to-equity of just 0.249 and a current ratio of 17.39 give DHI enormous financial flexibility through a housing downturn. TTM free cash flow of $3.309 billion funds operations internally, and the company still repurchased $610.4 million of stock and paid $127.1 million in dividends in Q3 2026 alone.
- Aggressive buybacks shrink share count: Shares outstanding fell from 325.2 million in Q4 2024 to 287.5 million in Q3 2026, a roughly 11.6% reduction that mechanically lifts per-share earnings. This capital return signals management confidence and provides a floor under EPS even while net income declines.
- Valuation near tangible book with low multiples: At 14.58x trailing and 12.36x forward earnings, with a 2.16x price-to-book near the low end of its 1.2x-2.5x historical band, DHI trades at a discount to its own boom-era multiples. The 1.53x PS and 11.43x EV/EBITDA are modest for the industry's largest, most efficient operator.
- Analyst target implies double-digit upside: The $153.29 average target across 14 analysts implies roughly +10.0% upside from $139.39, and the high target of $206 implies about 48% upside. Zelman & Assoc upgraded to Outperform in July 2026, showing some analysts see the trough forming.
Bearish
- Revenue growth has flatlined: Q3 2026 revenue of $9.227 billion grew just 0.02% year-over-year from $9.226 billion, a dramatic deceleration that shows affordability-constrained demand. The company is holding volume only by sacrificing price and margin through incentives and rate buydowns.
- Gross margin erosion of ~230bps over two years: Gross margin fell from 25.54% in Q4 2024 to 23.26% in Q3 2026, with the multi-quarter trajectory showing persistent compression. Net margin dropped to 9.81% from 11.11% a year ago, and EPS fell to $3.19 from $3.37, confirming earnings are now shrinking.
- Mortgage rates above 7% pressure demand: Surging Treasury yields have pushed mortgage rates above 7%, directly hitting buyer traffic and forcing builders to lean on buydowns. This is the single largest swing factor for the entire sector and shows no sign of near-term relief.
- Severe relative underperformance: DHI has lagged the S&P 500 by -24.38 percentage points over one year and -16.27 points YTD, confirming a sector-specific de-rating rather than broad market weakness. The stock sits 18.4% below its 52-week high of $170.79 and only 6.4% above its 52-week low of $130.40.
DHI Technical Analysis
D.R. Horton is in a sustained, orderly downtrend: the stock is down -8.85% over the past year and -4.34% year-to-date, and at $139.39 it sits at roughly 53% of its 52-week range of $130.40 to $170.79, meaning it is trading in the lower-middle half of the band rather than near either extreme. That positioning is neither a momentum breakout nor a capitulation low — it reflects a market that has repeatedly sold rallies, with the 52-week high of $170.79 established earlier in the period and the current price about 18.4% below that peak, while the 52-week low of $130.40 is only 6.4% beneath the current level. The relative-strength picture is damning: DHI has underperformed the S&P 500 by -24.38 percentage points over one year and -16.27 points YTD, confirming this is a sector-specific de-rating rather than broad market weakness.
Short-term momentum is stabilizing but not yet reversing. The 1-month change of +0.77% is a modest bounce off the September lows near $133, yet it still lags the S&P 500's +1.22% over the same window (relative strength of -0.45), and the 3-month change of -6.69% and 6-month change of -6.96% show the intermediate trend remains firmly negative. This creates a classic divergence: a flat-to-slightly-positive one-month print against a negative one-year trend, which typically signals either a mean-reversion bounce within a downtrend or the early formation of a base — the failure to reclaim the $150 area (the July consolidation zone) argues for the former. Volume of roughly 3.35 million shares is unremarkable, and with a short ratio of 3.94 days-to-cover, there is moderate bearish positioning that could fuel a squeeze on any rate-driven rally, but no evidence of accumulation strong enough to call a trend change.
Key technical levels are well defined. Support sits at the 52-week low of $130.40, with the October swing low of $133.23 acting as the first line of defense; a decisive breakdown below $130 would open the door to a new leg lower and likely trigger momentum-based selling. Resistance is anchored at the 52-week high of $170.79, with intermediate supply around $150-$155 where the stock repeatedly failed in July and August. With a beta of 1.351, DHI is roughly 35% more volatile than the market, meaning position sizing should be scaled down accordingly — a 1.35 beta amplifies both the rate-driven downside and any recovery rally, and the maximum drawdown of -26.78% over the period illustrates the real capital risk in this name.
Beta
1.35
1.35x market volatility
Max Drawdown
-24.3%
Largest decline past year
52-Week Range
$130-$171
Price range past year
Annual Return
-7.0%
Cumulative gain past year
| Period | DHI Return | S&P 500 |
|---|---|---|
| 1m | +5.2% | -1.0% |
| 3m | +0.5% | +2.9% |
| 6m | -7.8% | +6.5% |
| 1y | -7.0% | +13.1% |
| ytd | +1.2% | +11.4% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
DHI Fundamental Analysis
Revenue growth has essentially stalled. Fiscal Q3 2026 (quarter ended June 30, 2026) revenue was $9.227 billion, up just 0.02% year-over-year from $9.226 billion, a dramatic deceleration from the double-digit growth of prior cycles and a clear symptom of affordability-constrained demand. The sequential trend is more encouraging than the YoY comparison: revenue rose from $6.887 billion in Q1 to $7.558 billion in Q2 to $9.227 billion in Q3, reflecting normal seasonal build, but the flat YoY print confirms the company is holding volume only by sacrificing price and margin. Segment data shows homebuilding at $8.686 billion of the total, with Forestar at $407 million, rental at $266 million, and financial services at $221 million — the core homebuilding engine is carrying essentially all the weight, and any further softening in that segment would flow directly to the top line.
Profitability remains solid in absolute terms but is compressing. Q3 2026 net income was $904.9 million on a 9.81% net margin, down from $1.025 billion and an 11.11% net margin in the year-ago quarter, while gross margin fell to 23.26% from 23.95% a year earlier and from 25.54% back in Q4 2024. The multi-quarter gross margin trajectory — 25.54% (Q4 2024) to 25.09% (Q1 2025) to 24.57% (Q2 2025) to 23.95% (Q3 2025) to 23.16% (Q1 2026) to 22.54% (Q2 2026) to 23.26% (Q3 2026) — shows a persistent erosion of roughly 230 basis points over two years, driven by incentives, rate buydowns, and land cost inflation. Operating margin of 12.92% and EBITDA of $1.255 billion (13.60% margin) remain respectable for a homebuilder, but the direction of travel is the story: EPS of $3.19 in Q3 2026 versus $3.37 a year ago confirms earnings are now shrinking even as revenue holds flat.
Balance sheet strength is the company's key defense. Debt-to-equity is just 0.249, the current ratio is an extraordinary 17.39 (reflecting the inventory-heavy, receivables-light nature of homebuilding), and TTM free cash flow is $3.309 billion — ample to fund operations internally without external financing. ROE of 14.82% and ROA of 6.88% are healthy for the sector, and the company returned substantial capital in Q3 alone: $610.4 million of stock repurchases and $127.1 million of dividends, with cash of $2.135 billion at quarter-end. The caveat is working-capital volatility — Q2 2026 saw negative operating cash flow of -$412.5 million on a $1.199 billion working-capital build, and inventory days outstanding of roughly 339 days reflect the long cash conversion cycle inherent to the business; still, the low leverage and consistent buybacks (share count down from 325.2 million in Q4 2024 to 287.5 million in Q3 2026) signal a management team confident in its liquidity.
Quarterly Revenue
$9.2B
2026-06
Revenue YoY Growth
+0.0%
YoY Comparison
Gross Margin
23.3%
Latest Quarter
Free Cash Flow
$3.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
Open an Account, get $2 TSLA now!
Valuation Analysis: Is DHI Overvalued?
Because D.R. Horton is solidly profitable — Q3 2026 net income of $904.9 million and positive trailing EPS — the PE ratio is the appropriate primary metric. The stock trades at 14.58x trailing earnings and 12.36x forward earnings, and the roughly 15% compression from trailing to forward multiple implies the market expects modest earnings growth (consensus FY EPS of $20.18 against a current price of $139.39 implies about 6.9x forward earnings on that estimate, though the reported forward PE of 12.36x reflects a different earnings base). Either way, the gap signals the market is not pricing in a sharp earnings recovery — it is discounting continued margin pressure.
Relative to the residential construction sector, DHI screens cheap on most measures: a PS ratio of 1.53x, EV/Sales of 1.34x, and EV/EBITDA of 11.43x are modest for the largest player in the industry, and the 14.58x trailing PE sits below the premium multiples homebuilders commanded during the 2021-2023 boom (when DHI's own PE ranged from roughly 6x to 13x on a quarterly basis). The discount is arguably justified: net margin of 10.47% and gross margin of 23.70% are below the company's own historical peaks (gross margin exceeded 26% in 2022-2023), and the PEG ratio of -0.75 is meaningless given negative growth expectations. The 2.16x price-to-book is near the low end of its multi-year band, which historically ranged from about 1.2x to 2.5x, suggesting the market is valuing the equity close to tangible book with limited goodwill for future growth.
Historical context reinforces the "cheap but not obviously mispriced" read. DHI's quarterly PE has ranged from roughly 3.5x (Q3 2022, at the depth of the rate shock) to 17.7x (Q1 2026), and the current 14.58x is in the upper-middle of that band — not a historical bargain, but well below the 17.7x peak. The PS ratio of 1.53x compares favorably to the 4-6x range seen through 2023-2025, though that comparison is distorted by the different share-count and revenue bases in the historical data. Net-net, the valuation embeds a pessimistic but not apocalyptic view: investors are paying a low-teens multiple for a market leader with a fortress balance sheet, a 0.95% dividend yield, and a 13.8% payout ratio, with the key risk being further margin compression if mortgage rates stay above 7%.
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 and operational risks center on margin compression and earnings erosion. Gross margin has fallen from 25.54% in Q4 2024 to 23.26% in Q3 2026, a roughly 230bps decline driven by incentives and rate buydowns, while net margin dropped to 9.81% from 11.11% and EPS fell to $3.19 from $3.37 year-over-year. Revenue is essentially flat at 0.02% YoY growth, meaning the company is defending volume at the cost of profitability. Working-capital volatility is real: Q2 2026 saw negative operating cash flow of -$412.5 million on a $1.199 billion working-capital build, and inventory days of roughly 339 reflect a long cash conversion cycle. The offset is a fortress balance sheet with 0.249 debt-to-equity and $3.309 billion TTM free cash flow, which limits solvency risk but does not prevent earnings deterioration.
Market and competitive risks are dominated by the rate environment and valuation sensitivity. Mortgage rates above 7%, driven by surging Treasury yields, directly suppress buyer traffic and force continued incentive spending across the industry. DHI's beta of 1.351 means it is roughly 35% more volatile than the market, amplifying both rate-driven downside and any recovery rally. The stock has underperformed the S&P 500 by -24.38 percentage points over one year, a sector-specific de-rating that could extend if rates remain elevated. Competitive pressure from Berkshire-backed players (Taylor Morrison, Lennar) and the fragmented nature of residential construction mean pricing power is limited, and any aggressive share-gain tactics by peers could force further margin concessions.
A worst-case scenario would combine persistently elevated mortgage rates, continued gross margin compression toward the low-20% range, and a breakdown below technical support. A decisive break below the 52-week low of $130.40 would likely trigger momentum-based selling and open a new leg lower, with the analyst low target of $119 implying about -14.6% downside from the current $139.39. The stock's maximum drawdown of -26.78% over the observed period illustrates real capital risk; a repeat from current levels would take the shares toward roughly $102. In this adverse scenario, an investor could lose approximately -15% to the analyst low of $119, or -25% or more in a full drawdown repeat, with the beta of 1.351 magnifying losses relative to the broader market.