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D.R. Horton: Undervalued As The Leader Of The Industry

Mar. 08, 2018 9:51 AM ETD.R. Horton, Inc. (DHI)1 Comment
Gordon MacLean profile picture
Gordon MacLean


  • The company has performed very well in the last 2 years.
  • Minimal weakness seen in fundamentals.
  • Economic risks need to be monitored closely if initiating a position.
  • Technicals allow for low-risk entry with significant upside potential.

D.R. Horton, Inc. (NYSE:DHI) is the largest homebuilding company in the United States in terms of number of homes closed and revenues. As unemployment continues lower and wages continue higher, U.S. homebuilder sentiment sits near 18-year highs. After shares gained about 82% in 2017, despite the company still performing well fundamentally, they are down 15.5% YTD and are now testing the 200-day moving average. This gives investors a low-risk opportunity to buy off of support should the momentum of price action correct itself.


With the housing market remaining on cruise control, DHI is showing steady revenue growth YoY. The company finished 2017 with $14.09B, a 15.9% increase, which is slightly lower than the increase in 2016 of 16.12%. They seem to have kept this pace coming into 2018 by posting a Q1 increase of 14.75% from the same quarter in 2017. The rest of the year looks promising as well as 2018 FYE estimates are currently $16.20B, a 15% increase.

The company has started 2018 strong across the rest of the board as well. Gross profits came in 16.10% higher than expected at $752.6M, an 18.28% increase YoY. They also dominated their net income estimates, beating by 45.36% and their EPS estimates by 56.85%. They came in at $298M and $0.77 per share consecutively, which are YoY increases of 44.03% and 40%.

Strengths and weaknesses

The company has posted strong numbers throughout 2017 and 2018 is also shaping up to be more of the same. As I stated earlier, homebuilder sentiment is near 18-year highs and this is reflected in DHI's revenue. Strong top-line growth and consistent estimate beats are some of many strong points going for this company. By improving on most of the other key metrics as well, DHI is all around, a fundamentally sound business.


This article was written by

Gordon MacLean profile picture
My principal strategy involves conducting technical analysis to search for and identify key patterns which reveal opportunities for me to capitalize on short-term price action of an asset. Once a pattern is identified, a rigorous analysis of the company's financial health and overall business allows me to identify company's that qualify for an addition to my value portfolio as a longer-term holding, beyond my initial short-term horizon based off of the technical analysis done in phase 1 of my research.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in DHI over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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