D.R. Horton (DHI): Reassessing Valuation After a Recent Share Price Rally

D.R. Horton (DHI) shares have quietly pushed higher over the past month, easily outpacing the broader market. With the stock up roughly 14% in that stretch, investors are reassessing what they are paying for future housing demand.

See our latest analysis for D.R. Horton.

That latest jump takes D.R. Horton’s share price to about $165, capping a solid year to date share price return while the 3 year total shareholder return near doubles investors’ money. This suggests momentum is rebuilding as the market leans into resilient housing demand.

If D.R. Horton’s momentum has you thinking more about opportunities in housing linked names, it can also be worth scanning fast growing stocks with high insider ownership for other under the radar growers.

Given the rally and D.R. Horton now trading slightly above analyst targets despite solid earnings growth, the real question is whether investors still have upside left here or if the market is already pricing in future strength.

Most Popular Narrative Narrative: 10% Overvalued

With D.R. Horton last closing at $165 against a narrative fair value of about $164.80, the story points to a market pricing slightly ahead of itself.

The analysts have a consensus price target of $162.6 for D.R. Horton based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $199.0, and the most bearish reporting a price target of just $110.0.

Read the complete narrative.

Curious what kind of revenue ramp, margin stability, and earnings power could justify this range of outcomes? The narrative leans on surprisingly confident long term assumptions. Want to see what they are?

Result: Fair Value of $164.80 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, elevated incentives and persistent affordability pressures could squeeze margins and slow orders, quickly challenging the optimistic earnings and valuation assumptions baked in today.

Find out about the key risks to this D.R. Horton narrative.

Build Your Own D.R. Horton Narrative

If you see the story differently or would rather dig into the numbers yourself, you can build a custom view in minutes with Do it your way.

A great starting point for your D.R. Horton research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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