D. R. Horton
DHI
$148.35
+0.69%
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, while also providing mortgage financing and title services through its financial services segment. As a market leader with a dominant scale advantage, the company also holds majority ownership of Forestar Group, a residential lot development company, solidifying its competitive moat in the homebuilding industry. The current investor narrative centers on the impact of fluctuating mortgage rates and geopolitical tensions on housing demand, with recent news highlighting rate-driven volatility and a potential housing rebound, while the company's financial performance shows a slight revenue decline but robust profitability, keeping analysts focused on its cyclical positioning and long-term growth prospects.…
DHI
D. R. Horton
$148.35
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Investment Opinion: Should I buy DHI Today?
Based on the analysis, DHI is rated a Hold. The stock is trading at a forward PE of 12.65x, which is attractive relative to the market, and analysts have an average target of $162.92, implying a 9.5% upside. However, the recent revenue decline and high mortgage rates warrant caution. The company's strong balance sheet and dominant market position provide a margin of safety, but the cyclical headwinds could limit near-term gains. Investors should wait for signs of a housing market recovery before initiating a position.
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DHI 12-Month Price Forecast
The AI assessment is neutral, reflecting a balanced risk-reward profile. The stock is undervalued on forward earnings, but the near-term revenue decline and high mortgage rates cap upside. The key factor to watch is the direction of mortgage rates; if they fall, the stock could re-rate higher, but if they rise, downside risk increases. The AI would upgrade to bullish if revenue growth turns positive and mortgage rates show a clear downward trend, and downgrade to bearish if revenue declines accelerate or margins compress significantly.
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 +9.8% versus the current price.
Average Target
$162.92
0 analysts
Implied Upside
+9.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$125 - $206
Analyst target range
The target price range spans from a low of $125.00 to a high of $206.00, with the high target suggesting a potential upside of 38.4% from the current price, likely assuming a housing market rebound and margin expansion, while the low target implies a downside of 16.0%, reflecting risks from prolonged high mortgage rates and economic slowdown. The wide spread of $81 between the low and high targets indicates significant uncertainty among analysts about the company's future performance. Recent institutional ratings show no major upgrades or downgrades, with most firms maintaining their previous stances, suggesting a stable but cautious outlook. The consensus 'hold' rating and moderate upside potential suggest that analysts see the stock as fairly valued at current levels, with limited near-term catalysts.
Bulls vs Bears: DHI Investment Factors
D.R. Horton presents a mixed picture: it is a fundamentally sound company with a strong balance sheet, dominant market position, and attractive valuation, but it faces near-term headwinds from high mortgage rates and declining revenue. The bull case rests on the potential for rate cuts and a housing rebound, which could drive earnings growth and multiple expansion, while the bear case hinges on prolonged rate pressure and continued demand weakness. Currently, the evidence slightly favors the bearish side, given the recent revenue decline and underperformance, but the low valuation and analyst upside suggest limited downside. The key tension is whether mortgage rates will fall enough to stimulate housing demand, which would validate the bull thesis and potentially lead to a significant re-rating.
Bullish
- Undervalued with forward PE of 12.65x: The forward PE of 12.65x is well below the trailing PE of 14.58x, indicating the market expects earnings growth. With an estimated EPS of $13.60 for the next fiscal year, the stock trades at a significant discount to the broader market, offering value for a cyclical leader.
- Strong balance sheet with low leverage: Debt-to-equity is only 0.25, and the current ratio is a robust 17.39, indicating ample liquidity and financial flexibility. This low leverage provides a cushion against housing market downturns and allows for strategic land acquisitions when competitors are constrained.
- Dominant market position and scale: As the largest U.S. homebuilder with operations in 126 markets across 36 states, DHI benefits from economies of scale in land acquisition, construction, and marketing. This scale advantage supports consistent profitability even in a challenging rate environment.
- Analyst target upside of 9.5%: The average analyst target price is $162.92, implying a 9.5% upside from the current price of $148.81. With a high target of $206.00, there is potential for a 38.4% gain if the housing market rebounds, suggesting asymmetric upside.
Bearish
- Revenue declining year-over-year: Q2 FY2026 revenue fell 2.27% YoY to $7.558B from $7.734B, and the trend over the past five quarters shows a clear deceleration from $9.678B in Q4 FY2025. This indicates weakening demand, likely due to high mortgage rates.
- High mortgage rates suppress demand: Recent news highlights mortgage rates hitting a four-week high due to geopolitical tensions, cooling the housing market. As a homebuilder, DHI's sales are highly sensitive to mortgage rates, and elevated rates could continue to pressure volumes.
- Underperformance relative to S&P 500: Over the past year, DHI has underperformed the S&P 500 by 29.58% on a relative strength basis, with a 1-year price change of -9.21% versus the S&P's +20.37%. This suggests persistent negative sentiment and a lack of momentum.
- High beta of 1.375 amplifies market risk: With a beta of 1.375, DHI is more volatile than the market, meaning it will likely fall more than the S&P in a downturn. This adds risk for investors, especially in a rising rate environment.
DHI Technical Analysis
D.R. Horton's stock is currently in a range-bound consolidation phase, trading at $148.81 as of August 14, 2026, which is approximately 80.6% of its 52-week range (between $131.75 low and $184.55 high). The 1-year price change is -9.21%, indicating a modest downtrend over the past year, while the stock has gained 9.91% over the last 3 months, suggesting a recent recovery attempt. This positioning near the middle of the 52-week range reflects a market in equilibrium, with neither strong momentum nor deep value attraction, as the stock has underperformed the S&P 500 by 29.58% on a relative strength basis over the past year.
Beta
1.38
1.38x market volatility
Max Drawdown
-28.0%
Largest decline past year
52-Week Range
$132-$185
Price range past year
Annual Return
-8.4%
Cumulative gain past year
| Period | DHI Return | S&P 500 |
|---|---|---|
| 1m | +4.1% | +2.5% |
| 3m | +3.2% | +2.7% |
| 6m | -9.6% | +11.1% |
| 1y | -8.4% | +20.5% |
| ytd | +1.8% | +12.3% |
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DHI Fundamental Analysis
In the most recent quarter (Q2 FY2026, ended March 31, 2026), D.R. Horton reported revenue of $7.558 billion, a 2.27% year-over-year decline from $7.734 billion in the prior year quarter, indicating a slight contraction in top-line growth. The revenue trend over the past five quarters shows a deceleration from $9.678 billion in Q4 FY2025 to $7.558 billion in Q2 FY2026, with a notable drop in Q1 FY2026 to $6.887 billion, reflecting seasonal and market headwinds. Segment-wise, Homebuilding revenue was $7.063 billion, while Financial Services contributed $192.8 million, and Rental added $211.8 million, with Eliminations and Other reducing total revenue by $284 million, highlighting the core homebuilding business as the primary driver but with diversification into financial services and rental income.
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
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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 stands at 14.58x, while the forward PE is 12.65x, indicating that the market expects earnings growth, as the forward multiple is lower than the trailing multiple. This gap suggests that analysts anticipate an improvement in earnings per share, with estimated EPS of $13.60 for the next fiscal year, up from the trailing EPS of approximately $10.20, implying a growth rate of about 33%.
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 include a slight revenue decline of 2.27% YoY in the latest quarter, indicating softening demand. However, the company maintains a low debt-to-equity ratio of 0.25 and a strong current ratio of 17.39, providing financial stability. The net margin of 10.47% and operating margin of 12.92% are healthy, but any further margin compression due to incentives or land costs could pressure profitability. Free cash flow is positive at $3.5B TTM, but the cyclical nature of homebuilding means cash flows can be volatile, and the company's reliance on continued housing demand is a key risk.
FAQ
The key risks include: 1) High mortgage rates, which directly impact housing demand and could lead to further revenue declines; 2) Economic recession, which would reduce consumer confidence and home purchases; 3) Competitive pressures from other homebuilders, potentially leading to price cuts and margin compression; 4) Geopolitical events that could spike mortgage rates, as seen in recent news. The most severe risk is a prolonged period of high rates, which could push the stock down to the analyst low target of $125, a 16% loss.
The 12-month forecast is mixed. The base case (50% probability) sees the stock trading in a range of $145-$165, near the analyst average target of $162.92. The bull case (30% probability) targets $170-$206 if mortgage rates fall and housing demand rebounds. The bear case (20% probability) targets $125-$140 if rates rise further. The most likely scenario is a range-bound stock with a slight upward bias, as the low valuation provides support but high rates limit upside.
DHI is undervalued relative to its own history and the broader market. The trailing PE of 14.58x and forward PE of 12.65x are below the S&P 500's average PE of around 20x. The price-to-sales ratio of 1.53x is also reasonable for a homebuilder. The market is pricing in a challenging environment, but the low valuation suggests that much of the bad news is already reflected. If the housing market stabilizes, the stock could re-rate higher.
DHI is a good buy for investors with a long-term horizon and a tolerance for cyclical volatility. The stock is trading at a forward PE of 12.65x, which is attractive, and analysts see a 9.5% upside to the average target of $162.92. However, the recent revenue decline and high mortgage rates pose near-term risks. If you believe mortgage rates will fall, DHI offers a compelling risk-reward, but if rates stay high, the stock may remain range-bound. It is not a good buy for short-term traders or those seeking stable income.
DHI is more suitable for long-term investment, given its cyclical nature and high beta of 1.375. Short-term trading is risky due to high volatility and sensitivity to interest rate news. For long-term investors, the stock offers a potential for significant gains if the housing cycle turns, and the low valuation provides a margin of safety. A minimum holding period of 3-5 years is recommended to ride out the cyclicality and benefit from a potential housing recovery.