Now trading at a price of $109.33, D.R. Horton has moved 0.8% so far today.
D.R. Horton returned gains of 59.1% last year, with its stock price reaching a high of $111.25 and a low of $59.25. Over the same period, the stock outperformed the S&P 500 index by 56.0%. More recently, the company's 50-day average price was $99.19. D.R. Horton, Inc. operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. Based in Arlington, TX, the large-cap Consumer Discretionary company has 13,237 full time employees. D.R. Horton has offered a 0.9% dividend yield over the last 12 months.
An Exceptionally Strong Balance Sheet:
| 2019-09-30 | 2020-09-30 | 2021-09-30 | 2022-09-30 | |
|---|---|---|---|---|
| Revenue (MM) | $17,593 | $20,311 | $27,774 | $33,480 |
| Gross Margins | 22.0% | 24.3% | 28.4% | 31.4% |
| Operating Margins | 11.6% | 14.2% | 19.2% | 22.6% |
| Net Margins | 9.2% | 11.69% | 15.03% | 17.5% |
| Net Income (MM) | $1,618 | $2,374 | $4,176 | $5,858 |
| Depreciation & Amort. | -$72,000 | -$80,400 | -$73,900 | -$81,400 |
| Earnings Per Share | $4.29 | $6.41 | $11.41 | $14.81 |
| EPS Growth | n/a | 49.42% | 78.0% | 29.8% |
| Diluted Shares (MM) | 377 | 370 | 366 | 341 |
| Free Cash Flow (MM) | $668 | $1,135 | $267 | $414 |
| Capital Expenditures (MM) | -$224 | -$287 | -$267 | -$148 |
| Net Current Assets (MM) | $8,556 | $10,016 | $12,944 | $16,049 |
| Current Ratio | 7.25 | 6.7 | 6.42 | 5.92 |
| Long Term Debt | $3,399,400 | $4,283,300 | $5,412,400 | $6,066,900 |
| Net Debt / EBITDA | 1.36 | 0.43 | 0.41 | 0.46 |
D.R. Horton has exceptional EPS growth, an excellent current ratio, and low leverage. The company also benefits from growing revenues and decreasing reinvestment in the business, average operating margins with a positive growth rate, and generally positive cash flows. However, the firm has slimmer gross margins than its peers.
The Market May Be Undervaluing D.R. Horton's Earnings and Assets:
D.R. Horton has a trailing twelve month P/E ratio of 6.7, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $11.2, the company has a forward P/E ratio of 8.9. According to the 21.2% compound average growth rate of D.R. Horton's historical and projected earnings per share, the company's PEG ratio is 0.32. Taking the weighted average of the company's EPS CAGR and the broader market's 5-year projected EPS growth rate, we obtain a normalized growth rate of 10.3%. On this basis, the company's PEG ratio is 0.65. This suggests that its shares are undervalued. Additionally, the market is possibly undervaluing D.R. Horton in terms of its equity because its P/B ratio is 1.8 whereas the sector average is 3.12. The company's shares are currently trading -2.7% below their Graham number.
D.R. Horton Has an Analyst Consensus of Some Upside Potential:
The 15 analysts following D.R. Horton have set target prices ranging from $98.0 to $148.0 per share, for an average of $121.27 with a buy rating. As of April 2023, the company is trading -18.2% away from its average target price, indicating that there is an analyst consensus of some upside potential.
D.R. Horton has an average amount of shares sold short because 5.7% of the company's shares are sold short. Institutions own 88.6% of the company's shares, and the insider ownership rate stands at 10.76%, suggesting a large amount of insider shareholders. The largest shareholder is Capital World Investors, whose 12% stake in the company is worth $4,438,933,892.
