D. R. Horton
DHI
$142.64
-0.77%
D.R. Horton Inc. is the leading homebuilder in the United States, primarily constructing single-family detached homes while also offering products for move-up, luxury, and active adult buyers. The company operates across 126 markets in 36 states and distinguishes itself through its integrated financial services segment, which provides mortgage financing and title services to homebuyers. The current investor narrative is dominated by the interplay between cyclical headwinds from rising mortgage rates and geopolitical uncertainty, as highlighted in recent news, and the company's ability to navigate these challenges given its scale and operational efficiency. Investors are debating whether the stock represents a value opportunity ahead of potential Federal Reserve rate cuts or a continued cyclical underperformer.…
DHI
D. R. Horton
$142.64
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 $185.43 and implied upside of +30.0% versus the current price.
Average Target
$185.43
6 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
6
covering this stock
Price Range
$114 - $185
Analyst target range
Analyst coverage is limited, with only 6 analysts providing estimates, which can lead to higher volatility and less efficient price discovery typical for stocks with lower institutional coverage. The consensus sentiment appears neutral to cautious, as evidenced by recent ratings actions including a downgrade from Wells Fargo to 'Equal Weight' and from Citizens to 'Market Perform' in early January 2026, though firms like Argus Research and UBS maintain 'Buy' ratings. The average target price and specific buy/hold/sell distribution are not available in the provided data, preventing a calculation of implied upside or downside to a consensus target. The estimated EPS range for analysts is wide, from a low of $10.25 to a high of $18.17, reflecting significant uncertainty about the company's earnings trajectory amid volatile mortgage rates and housing demand. This wide dispersion in estimates signals low conviction and high uncertainty regarding the fundamental outlook, making the stock more susceptible to sharp price moves based on macroeconomic data and Fed policy shifts.
Bulls vs Bears: DHI Investment Factors
The investment debate for DHI is a classic battle between cyclical headwinds and fundamental resilience. The bear case, supported by a clear revenue downtrend, high market volatility, and negative momentum, currently has stronger evidence as the stock price reflects deteriorating near-term fundamentals. However, the bull case is underpinned by a fortress balance sheet, discounted valuation, and operational efficiency that could enable the company to outperform in a recovery. The single most important tension is the timing and magnitude of Federal Reserve rate cuts versus the persistence of high mortgage rates; a pivot to easing would validate the value thesis, while sustained high rates would extend the cyclical pressure and test DHI's pricing power and margins.
Bullish
- Strong Balance Sheet & Liquidity: DHI's financial risk is minimal with a debt-to-equity ratio of 0.25 and a current ratio of 17.4, providing ample liquidity to navigate a downturn. The company generated $3.48B in TTM free cash flow, funding operations and shareholder returns without reliance on external debt.
- Attractive Valuation vs. Sector: The stock trades at a trailing P/E of 14.6x and a forward P/E of 11.7x, a discount to typical homebuilder valuations in the high-teens to low-20s. This discount exists despite DHI's industry-leading scale and consistent profitability, suggesting a potential value opportunity.
- Operational Efficiency & Profitability: Despite a 9.5% YoY revenue decline, DHI maintained a net margin of 8.6% and a gross margin of 23.2% in Q1 2026. The company's ROE of 14.8% demonstrates effective capital allocation and operational resilience in a challenging market.
- Deeply Oversold Technical Position: Trading at $142.64, the stock is near the 40th percentile of its 52-week range, much closer to its low of $114.17 than its high of $184.55. This oversold condition, combined with a -9.3% 3-month decline, may present a contrarian entry point if cyclical pressures ease.
Bearish
- Revenue & Earnings Downtrend: Q1 2026 revenue of $6.89B declined 9.5% YoY, continuing a sequential decline from $9.68B in Q4 2025. Net income of $594.8M also fell from $905.3M the prior quarter, signaling a clear cyclical slowdown in the core homebuilding business.
- High Beta & Negative Momentum: DHI's beta of 1.445 means it is 44.5% more volatile than the market, amplifying downside moves. The stock is underperforming the S&P 500 with a -0.48 relative strength over the past month, indicating accelerating weakness and high sensitivity to macro fears.
- Analyst Uncertainty & Downgrades: Only 6 analysts cover the stock, and recent downgrades from Wells Fargo and Citizens reflect caution. The wide EPS estimate range of $10.25 to $18.17 signals low conviction and high uncertainty about the earnings trajectory amid volatile mortgage rates.
- Cyclical Headwinds from Rates: Recent news highlights mortgage rates hitting a three-month high due to geopolitical risk, directly cooling housing demand. As a rate-sensitive stock, DHI's near-term performance is heavily dependent on Fed policy, which remains a headwind.
DHI Technical Analysis
The stock is in a pronounced downtrend, having declined 9.31% over the past three months and 5.90% over the last six months, which contrasts sharply with its positive 21.01% gain over the past year, indicating a significant trend reversal. Currently trading at $142.64, the price sits at approximately 40% of its 52-week range, positioned much closer to its 52-week low of $114.17 than its high of $184.55, suggesting the stock is in a deeply oversold territory that may present a value opportunity, though it also signals persistent negative momentum. Recent momentum is decisively negative, with the stock down 2.10% over the past month, underperforming the S&P 500 (SPY) which gained 0.46%, resulting in a relative strength of -0.481, confirming the stock's weakness is accelerating relative to the broader market. This short-term decline diverges from the longer-term positive 1-year trend, potentially signaling a deeper cyclical correction rather than a temporary pullback, exacerbated by the stock's high beta of 1.445, which amplifies its downside moves in a risk-off environment. Key technical support is firmly established at the 52-week low of $114.17, while immediate resistance lies near the recent highs around $167.78 from mid-February. A sustained breakdown below the $114 support would signal a continuation of the bearish trend, whereas a recovery above the $167 resistance could indicate a reversal, though the stock's high beta implies 44.5% greater volatility than the market, necessitating larger position sizing adjustments for risk management.
Beta
1.45
1.45x market volatility
Max Drawdown
-28.0%
Largest decline past year
52-Week Range
$114-$185
Price range past year
Annual Return
+21.0%
Cumulative gain past year
| Period | DHI Return | S&P 500 |
|---|---|---|
| 1m | -0.0% | +2.6% |
| 3m | -9.3% | -2.3% |
| 6m | -5.9% | +2.6% |
| 1y | +21.0% | +27.3% |
| ytd | -2.1% | -0.4% |
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DHI Fundamental Analysis
Revenue growth has decelerated, with the most recent quarterly revenue of $6.89 billion representing a 9.54% year-over-year decline, continuing a trend of sequential quarterly revenue decreases from $9.68 billion in Q4 2025 and $9.23 billion in Q3 2025. The Homebuilding segment, contributing $6.53 billion, remains the core driver, but the overall trajectory reflects the cooling housing market, which pressures the investment case reliant on volume and pricing power. The company remains profitable with net income of $594.8 million in Q1 2026, translating to a net margin of 8.64%, though this is a compression from the 9.35% net margin in the prior quarter. Gross margin for the quarter was 23.16%, showing stability compared to the 21.67% in Q4 2025 but down from the 23.95% peak in Q3 2025, indicating some pressure on pricing or input costs, which is typical for the industry during a slowdown. The balance sheet is exceptionally strong, with a low debt-to-equity ratio of 0.249 and a robust current ratio of 17.39, indicating ample liquidity. The company generated substantial free cash flow of $3.48 billion over the trailing twelve months and an ROE of 14.82%, demonstrating its ability to fund operations and shareholder returns internally without excessive reliance on debt, significantly mitigating financial risk.
Quarterly Revenue
$6.9B
2025-12
Revenue YoY Growth
-0.09%
YoY Comparison
Gross Margin
+0.23%
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 the company's positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing PE is 14.58x, while the forward PE is 11.74x, with the lower forward multiple implying the market expects earnings growth or reflects a discounted valuation due to near-term cyclical concerns. Compared to sector averages, DHI's trailing PE of 14.58x is at a discount to the typical homebuilder, which often trades in the high-teens to low-20s PE range, suggesting the market is pricing in a more pessimistic outlook. This discount is likely attributed to the cyclical headwinds of rising mortgage rates and slowing revenue growth, though it may not be fully justified given the company's industry-leading scale, strong balance sheet, and consistent profitability. Historically, the stock's own PE ratio has fluctuated significantly, with a recent high of 17.70x in Q1 2026 and a low of 8.00x back in Q1 2023. The current trailing PE of 14.58x sits roughly in the middle of this recent historical range, indicating the market is neither excessively optimistic nor pessimistic, but rather pricing in a moderate cyclical slowdown without a severe downturn.
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 & Operational Risks: DHI faces clear cyclical risks, with Q1 2026 revenue declining 9.5% year-over-year and net income falling 34% sequentially from the prior quarter. While the balance sheet is strong (D/E 0.25), the investment case relies on a reversal of this downtrend. Margin compression is a key risk, as the net margin of 8.6% has declined from 9.4% last quarter, and further pricing pressure or input cost inflation could erode profitability. The company's scale mitigates but does not eliminate its exposure to a prolonged housing slowdown, which would pressure volume and pricing power.
Market & Competitive Risks: The primary market risk is valuation compression. DHI trades at a discount to sector peers (P/E 14.6x), but this could widen further if earnings estimates are cut, as suggested by the wide analyst EPS range ($10.25-$18.17). The stock's high beta of 1.445 makes it highly sensitive to broader market sell-offs and risk-off sentiment, particularly around interest rate expectations. Competitive and regulatory risks are elevated, as any regulatory changes to mortgage lending or a sharp increase in existing home inventory could further suppress demand for new construction.
Worst-Case Scenario: The worst-case scenario involves a severe, protracted housing recession triggered by mortgage rates remaining elevated or rising further due to persistent inflation or geopolitical conflict. This would lead to multiple quarters of double-digit revenue declines, significant margin compression, and analyst EPS estimates trending toward the low end of the range ($10.25). In this adverse scenario, the stock could re-test its 52-week low of $114.17, representing a downside of approximately -20% from the current price of $142.64. The high beta suggests the decline could be swift and severe in a broad market downturn.