DHI

D.R. Horton Inc. (DHI) - Undervalued With Decent Growth Factors

D.R. Horton shares moved -15.3% over the last 52 weeks, with a high of $108.64 and a low of $59.25. During this time, the stock underperformed the S&P 500 index by 4.6%. As of January 2022, the company's 50-day average price is $82.0. D.R. Horton, Inc. is a home construction company incorporated in Delaware and headquartered in Arlington, Texas. Since 2002, the company has been the largest homebuilder by volume in the United States. The large-cap Consumer Cyclical company has 13,237 full time employees. D.R. Horton has returned a 1.0% dividend yield over the last 12 months.

The Business Has GrowingRate:

2019-09-30 2020-09-30 2021-09-30 2022-09-30
Revenue (MM) $17,593 $20,311 $27,774 $33,480
Revenue Growth n/a 15.45% 36.74% 20.54%
Gross Margins 22.0% 24.3% 28.4% 31.4%
Gross Margins Growth n/a 10.45% 16.87% 10.56%
Operating Margins 11.6% 14.2% 19.2% 22.6%
Operating Margins Growth n/a 22.41% 35.21% 17.71%
Earnings Per Share $4.29 $6.41 $11.41 $16.51
EPS Growth n/a 49.42% 78.0% 45%
Free Cash Flow (MM) $668 $1,135 $267 $414
FCF Growth n/a 69.88% -76.47% 54.91%
Capital Expenditures (MM) -$224 -$287 -$267 -$148
Net Debt / EBITDA 0.93 0.45 0.41 0.47

D.R. Horton has Attractive P/E and P/B Ratios and Trades Below Its Graham Number:

Compared to the Consumer Cyclical sector's average of 24.11, D.R. Horton has a trailing twelve month price to earnings (P/E) ratio of 5.4 and, based on its EPS guidance of 9.97, an expected P/E ratio of 8.9.

The firm's price to earnings growth (PEG) is -0.89, which tells us that the company is expected to have negative growth in the future.

D.R. Horton is undervalued in terms of its assets because its price to book (P/B) ratio is 1.6 compared to its sector average of 3.11. As of the date of publication, the company's shares are trading -38.4% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the forumla:

√(22.5 * TTM earnings per share * book value per share) = √(22.5 * 16.51 * 56.392) = $144.73

D.R. Horton Has an Average Rating of Buy and an Analyst Consensus of Some Upside Potential:

18 analysts are following D.R. Horton and have set target prices ranging from $68 to $115 per share. On average, they have given the company a rating of buy. At the current price of $89.14, DHI is trading -5.67% away from its average analyst target price of $94.5 per share, implying an analyst consensus of some upside potential for the stock.

The company has an average amount of shares sold short since 6.9% of the company's shares are tied to short positions. Institutions own 87.3% of D.R. Horton's shares, while the insider ownership rate stands at 12.24%. The biggest shareholder is Capital World Investors with a 11% stake in the company worth approximately $3,408,072,838.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.

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