DHI
D.R. Horton, Inc.$152.70
Unclear
Target $145.82
Report: Mar 07, 2026Consumer Cyclical • Residential Construction • Cyclical OperatorSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$152.70-4.5%
Rec: UnclearConviction: Medium
Entry Target
$112.17
(27% below current)
Fair Value
$145.82
(5% below current)
Stop Loss
$110.44
(28% below current)
Position Size
Starter
Time Horizon
Transitional (12-24 Months)
Key Metrics
Live Snapshot
Market Data
52 Week High$184.55
52 Week Low$110.44
Avg. 3 Month Volume3.08M
Efficiency
LTM Gross Margin23.3%
LTM EBITDA Margin13.4%
LTM EBIT Margin13.1%
LTM Operating Margin12.3%
LTM ROA9.4%
LTM ROE13.8%
LTM ROIC11.3%
LTM ROCE12.4%
Capital Structure
Market Cap (MM)$39.8B
Enterprise Value (MM)$42.7B
Shares Outstanding292.30M
Total Debt (MM)$5.55B
Cash & Equivalents (MM)$2.55B
LTM Net Debt (MM)$2.99B
LTM Net Debt/EBITDA0.7x
Growth
TTM Rev. Growth-8.6%
Last 3-Yr Rev. CAGR-0.2%
Last 3-Yr EBITDA CAGR-15.4%
Last 3-Yr EPS CAGR-12.1%
Valuation
Street Target Price$167.00
LTM EV/Revenue1.3x
LTM EV/Gross Profit5.5x
LTM EV/EBIT9.7x
LTM EV/EBITDA9.5x
LTM P/E11.9x
LTM EV/FCF12.2x
LTM P/FCF11.4x
LTM P/TB1.2x
LTM P/B1.7x
Dividend Yield1.2%
Payout Ratio14.9%
Executive SummarySituation: Current price is $152.7 versus fair value $145.82 (-4.5% expected return), and valuation confidence is stable. Debate: Bull case depends on Federal Reserve Interest Rate Cuts Lower benchmark rates would immediately reduce the cost of D.R. Bear case centers on Lower-for-Longer Affordability Crisis If mortgage rates remain above 7%, the company will be forced to maintain or increase its current incentive levels, leading to permanent margin erosion below 20% gross. Conclusion: Recommendation is Unclear; maintain no position until reliability and catalyst evidence improve.
Bull Case
D.R. Horton's 14% market share and controlled lot supply through Forestar position it to capture the inevitable rebound in housing demand driven by a 3.8 million unit national shortage. Furthermore, the company's $6.6 billion in liquidity and 0.7x net leverage provide the 'dry powder' necessary to acquire distressed land and competitors during the trough.
Bear Case
Persistent 8% lot-cost inflation and the necessity of aggressive mortgage rate buy-downs are structurally impairing gross margins, which have already fallen from 25.9% to 23.7%. Additionally, the company's reliance on debt-financed buybacks (57.7% of recent repurchases) during a period of declining ROIC (-74.2% incremental) suggests value destruction.
Key Catalysts
Mid-Term (6-18 months)Impact: Critical
Federal Reserve Interest Rate Cuts Lower benchmark rates would immediately reduce the cost of D.R. Horton's mortgage buy-down programs, dire...
Near-Term (0-6 months)Impact: High
Community Count Expansion A projected 10% increase in active selling communities would allow the company to offset ASP declines with volume...
Long-Term (18+ months)Impact: Moderate
D.R. Horton is relevant for analysis now because it has just completed a leadership transition and is aggressively using its balance sheet f...
Primary Risks
Concern: High
Lower-for-Longer Affordability Crisis If mortgage rates remain above 7%, the company will be forced to maintain or increase its current ince...
Concern: Medium
Balance Sheet Over-Leveraging The use of $5.6 billion in new debt to fund buybacks during a cyclical trough could impair the company's abili...
Concern: Medium
Stewardship is generally strong, bolstered by a board with significant cyclical expertise, such as Barbara Smith (former CEO of Commercial M...
Recent Activity
2025-10-07Analyst Target
-6.05%Firm: Evercore ISI Price Target: $169.00 Price When Posted: $171.53 Implied Downside: -1.5%
2025-07-22SEC Filing (8-K)
+16.98%D.R. Horton reports Q3 FY2025 earnings with EPS of $3.36, declares $0.40 dividend
2024-10-29SEC Filing (8-K)
-7.24%D.R. Horton reports Q4 FY2024 earnings with EPS of $3.92, increases dividend to $0.40
2024-07-18SEC Filing (8-K)
+10.10%D.R. Horton reports Q3 FY2024 earnings with EPS of $4.10, declares $0.30 dividend
2024-04-10SEC Filing (SC 13G/A)
-6.39%Vanguard Group increases stake in DR Horton Inc to 10.50% (3,485,639 shares)
Valuation Table
9.8/10Decision Grade
Scenario Range
$113
Bear
$33
Base
$247
Bull
$153