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Valued at a market cap of $37.1 billion, D.R. Horton, Inc. (DHI) is a homebuilding company headquartered in Arlington, Texas. It acquires and develops land, and constructs and sells residential homes across a wide range of buyer segments. The company offers a diverse portfolio under multiple brands, catering to entry-level, move-up, luxury, and active adult buyers. In addition to homebuilding, it develops rental properties and provides financial services through its subsidiaries, such as DHI Mortgage and DHI Title.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and D.R. Horton fits the label perfectly, with its market cap exceeding this threshold, underscoring its size, influence, and dominance within the residential construction industry. As one of the largest homebuilders in the U.S., the company benefits from significant economies of scale, enabling cost efficiency and competitive pricing. Its key strengths lie in its scale, geographic diversification, and vertically integrated business model. Additionally, its in-house mortgage, title, and insurance services enhance customer convenience and streamline the buying process, contributing to strong customer retention and operational efficiency.
This homebuilding company has dipped 39.6% from its 52-week high of $199.85, reached on Sep. 19, 2024. Shares of DHI have declined 9.9% over the past three months, lagging behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 3% rise during the same time frame.
In the longer term, DHI has fallen 16% over the past 52 weeks, considerably underperforming XLY’s 18.9% uptick over the same time frame. Moreover, on a YTD basis, shares of DHI are down 13.7%, compared to XLY’s 5.4% loss.
To confirm its bearish trend, DHI has been trading below its 200-day moving average since early December, 2024, and has remained below its 50-day moving average since late October, with slight fluctuations.
On Apr. 17, shares of DHI surged 3.2% after its Q2 earnings release despite delivering a weaker-than-expected performance. The company’s revenue declined 15.1% year-over-year to $7.7 billion and missed the consensus estimates by 4.4%. Moreover, its net income per share of $2.58 fell 26.7% from the year-ago quarter, falling short of Wall Street expectations by 3%. The shortfall was largely driven by the slower-than-anticipated spring selling season, which was impacted by affordability challenges and declining consumer confidence.
However, investor sentiment remained positive, possibly due to management’s proactive measures, such as increasing sales incentives to boost demand and strategically balancing sales pace and pricing to optimize return. Additionally, the company’s cost of sales decreased by 13.9% year-over-year to $5.8 billion, which may have further reassured investors about its margin management.
DHI has outpaced its rival, KB Home (KBH), which declined 26.2% over the past 52 weeks and 21.5% on a YTD basis.
Despite DHI’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of "Moderate Buy” from the 19 analysts covering it, and the mean price target of $152.63 suggests a 26.4% premium to its current price levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
