How Strong Earnings Reports Are Shaping D.R. Horton’s Market Value in 2025

If you have D.R. Horton in your portfolio or have been watching from the sidelines wondering if now is the time to buy, you are not alone. The stock has been anything but boring lately. Over the past month, shares are up roughly 24.5%. Looking back three months, that gain stretches to more than 37%. Even after accounting for a small dip over the last week, the recent surge shows investors are betting on growth, or at least a shift toward renewed optimism around homebuilders. D.R. Horton has weathered more than a few market headwinds over the last year, with a total return loss of about 11.4% on a one-year basis. If you look further back to a three- or five-year horizon, the returns are truly impressive, more than doubling in total value. That kind of volatility can leave investors wondering whether the current price represents a new normal or just another swing in the market’s ongoing tug-of-war between opportunity and caution. Notably, D.R. Horton scores a 3 out of 6 on our undervaluation checklist, using a blend of six time-tested valuation checks. This means it passes half of the criteria analysts use to spot stocks trading below their intrinsic worth. To make sense of all this, we will walk through the main valuation tools investors rely on and show where D.R. Horton stands today. Before you make any decisions, we will also cover a more comprehensive approach that could change the way you look at the stock’s value. D.R. Horton delivered -11.4% returns over the last year. See how this stacks up to the rest of the Consumer Durables industry.

Approach 1: D.R. Horton Cash Flows

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to today using an appropriate rate. This approach gives investors a sense of what a business is fundamentally worth, rather than simply looking at its market price.

For D.R. Horton, the latest twelve months' Free Cash Flow sits at $2.77 Billion, with forecasts showing steady growth ahead. Analyst projections estimate that annual free cash flow could climb to $4.58 Billion in 2035. Each year’s cash flow is discounted to reflect today’s dollars using a two-stage approach, as is standard in modern cash flow analysis.

When these numbers are used in the DCF formula, the model yields an estimated fair value per share of $212.03. Comparing this intrinsic value to the current stock price, D.R. Horton appears 22.9% undervalued. This suggests the market may be underestimating the company’s long-term earnings power, potentially offering investors a margin of safety.

Result: UNDERVALUED

Our DCF analysis suggests D.R. Horton is undervalued by 22.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: D.R. Horton Price vs Earnings

For profitable companies like D.R. Horton, the Price-to-Earnings (PE) ratio is a widely accepted way to assess value because it directly measures how much investors are willing to pay for each dollar of earnings. This makes it especially relevant for established businesses generating strong profits, as it quickly indicates whether a stock is expensive or cheap compared to its ability to produce earnings.

The “right” PE ratio is not set in stone. It often reflects growth expectations and the level of risk, both for the company and its industry. A company that is growing faster or has lower risks generally commands a higher multiple, while slower growth or greater risks lead to lower multiples.

Looking at the numbers, D.R. Horton trades at a PE of 12.29x. This is slightly above the Consumer Durables industry average of 10.86x, and also surpasses the average for its direct peers, which sits at 10.99x. However, Simply Wall St’s Fair Ratio for D.R. Horton is calculated to be 18.41x, which is significantly higher than the company’s current multiple. This Fair Ratio factors in D.R. Horton’s growth profile, profitability, sector risks, and size, suggesting investors would typically pay a higher multiple for this company.

Comparing D.R. Horton’s current PE to its Fair Ratio signals that the market may be undervaluing its long-term strengths and growth potential.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your D.R. Horton Narrative

Beyond ratios and forecasts, a “Narrative” is the story you tell about a company using numbers and your assumptions about where it is headed, connecting your personal viewpoint to projected revenue, earnings, and fair value.

Narratives link the company’s journey, such as expanding affordable homes, facing market pressures, or leveraging industry strengths, directly to a forecast and a calculated fair value. This ensures your investment thesis is built on more than just historical trends or market sentiment.

On the Simply Wall St platform, Narratives are an accessible, community-driven tool that help you visualize your scenario and compare it to what other investors believe, all within a few clicks. When you craft a Narrative, it automatically updates as new earnings or news emerge, making your thesis as dynamic as the real world.

This approach makes buy and sell decisions clearer, as you can see how your personal fair value stacks up against the current market price. For instance, some investors may believe D.R. Horton’s value could rise to $187, thanks to long-term demand and expansion; others may be more conservative, expecting only $110 if risks materialize. Your Narrative frames which scenario you find most likely and actionable.

Do you think there's more to the story for D.R. Horton? Create your own Narrative to let the Community know!

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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