Arlington, Texas-based D.R. Horton, Inc. (DHI) engages in acquiring and developing land and constructing and selling residential homes. With a market cap of $52.7 billion, the company operates in the East, North, Southeast, South Central, Southwest, and Northwest regions of the United States.
The Housing giant has lagged behind the broader market over the past year. DHI stock has gained 6.5% on a YTD basis and 31.9% over the past 52-week period, compared to the S&P 500 Index’s ($SPX) 25.5% gains in 2024 and 35.5% returns over the past year.
Narrowing the focus, DHI has also underperformed the SPDR S&P Homebuilders ETF’s (XHB) 21.4% gains in 2024 and 49.9% returns over the past year.
Shares of D.R. Horton plummeted 7.2% after the release of its Q4 earnings on Oct. 29. Due to the underperformance of its Homebuilding and Rental Property segments, the company’s overall revenues declined 4.8% year-over-year to $10 billion. The high mortgage rates and buyers’ hesitation have hurt D.R. Horton’s topline growth. Despite a drop in mortgage rates from its peak, the rates have remained high and are expected to decline further in 2025, delaying customers’ purchase decisions in the current quarters.
D.R. Horton’s profitability has also taken a sharp hit with its net income to shareholders declining around 15% compared to the year-ago quarter to $1.3 billion as it observed an increase in SG&A and other expenses. Moreover, its EPS of $3.92 missed analysts’ estimates by a notable 6.7%, unsettling investors’ confidence.
For the current fiscal, ending in September 2025, analysts expect DHI to report a 4% year-over-year growth in EPS to $14.92. The company’s earnings surprise history is mixed. It surpassed analysts’ bottom-line estimates in two of the past four quarters while missing on two other occasions.
DHI stock has a consensus “Moderate Buy” rating overall. Out of the 19 analysts covering the stock, 10 recommend “Strong Buy,” one advises “Moderate Buy,” seven suggest “Hold,” and one advocates a “Strong Sell” rating.
On Oct. 31, BTIG lowered its price target on D.R. Horton to $186, maintaining a “Buy” rating following the company’s Q4 earnings miss. The firm attributes the shortfall to lower delivery volume, pricing pressure, reduced margins, and softer financial services income, as customers delay purchases amid high interest rates and upcoming elections.
DHI’s mean price target of $191.78 represents a premium of 18.5% to current price levels. The Street-high target of $220 suggests a potential upside of 35.9%.
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