DHI
CyclicalD. R. Horton
Price Chart
Market Data
Financials
XBRL · SEC EDGAR2009–2025(17yr)| Metric | FY 2009 | FY 2010 | FY 2011 | FY 2012 | FY 2013 | FY 2014 | FY 2015 | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2023 | FY 2024 | FY 2025Latest | YoY |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | $3.7B | $4.4B | $3.6B | $4.4B | $6.3B | $8.0B | $10.8B | $12.2B | $14.1B | $16.1B | $17.6B | $20.3B | $27.8B | $33.5B | $35.5B | $36.8B | $34.3B | -6.9% |
| Gross Profit | — | — | — | — | — | — | — | $2.7B | $3.0B | $3.7B | $3.9B | $4.9B | $7.9B | $10.5B | $9.4B | $9.5B | $8.1B | -14.9% |
| Gross Margin | — | — | — | — | — | — | — | 21.8% | 21.6% | 22.8% | 22.0% | 24.3% | 28.4% | 31.4% | 26.4% | 25.9% | 23.7% | -2.2pp |
| Net Income | -$549.8M | $245.1M | $71.8M | $956.3M | $462.7M | $533.5M | $750.7M | $886.3M | $1.0B | $1.5B | $1.6B | $2.4B | $4.2B | $5.9B | $4.7B | $4.8B | $3.6B | -24.6% |
| Net Margin | -15.0% | 5.6% | 2.0% | 22.0% | 7.4% | 6.6% | 6.9% | 7.3% | 7.4% | 9.1% | 9.2% | 11.7% | 15.0% | 17.5% | 13.4% | 12.9% | 10.5% | -2.5pp |
| Free Cash Flow | $1.1B | $690.2M | -$1.4M | -$331.7M | -$1.3B | -$761.6M | $644.3M | $531.9M | $277.8M | $477.1M | $764.9M | $1.3B | $440.9M | $413.6M | $4.2B | $2.0B | $3.3B | +62.2% |
| FCF Margin | 31.0% | 15.7% | -0.0% | -7.6% | -20.6% | -9.5% | 6.0% | 4.4% | 2.0% | 3.0% | 4.3% | 6.5% | 1.6% | 1.2% | 11.7% | 5.5% | 9.6% | +4.1pp |
| EPS (Diluted) | $-1.73 | $0.77 | $0.23 | $2.77 | $1.33 | $1.50 | $2.03 | $2.36 | $2.74 | $3.81 | $4.29 | $6.41 | $11.41 | $16.51 | $13.82 | $14.34 | $11.57 | -19.3% |
1. THE BIG PICTURE
D. R. Horton is currently a study in defensive scale. While it remains the largest U.S. homebuilder by volume, it is currently liquidating its competitive advantages—specifically its lower cost of capital and volume discounts—to fund the "elevated incentives" required to move homes in a high-rate environment (8-K). D. R. Horton is effectively using its balance sheet to bridge the gap between high construction costs and what consumers can actually afford.
2. WHERE THE RISKS HIT HARDEST
D. R. Horton’s primary strength, its "industry-leading market share" and "broad geographic footprint," is directly threatened by cyclical economic sensitivity because its massive inventory of land and rental properties is vulnerable to impairment (10-K Item 1A). If housing demand continues to soften, the very scale that provides D. R. Horton with volume rebates from suppliers becomes a liability, as it may be forced to record significant charges on assets that cannot be sold profitably. Furthermore, the "decentralized operations" intended to provide local flexibility are being tested by national macro pressures; local managers can make operational decisions, but they cannot control the Federal Reserve’s impact on mortgage originations, which has already sent rental segment pre-tax income plummeting from $11.9 million to just $0.2 million (10-Q).
3. WHAT THE NUMBERS SAY TOGETHER
The financial data reveals a widening gap between D. R. Horton’s historical dominance and its current trajectory. While D. R. Horton maintains a 10.4% net margin—ranking second among its peers—its revenue growth of -6.9% is the worst in the group (XBRL). This divergence is accelerating: the most recent quarter showed a 10% revenue decline and a 30% drop in net income (8-K). This suggests that the "affordability constraints" cited by management are structural rather than temporary. Despite these headwinds, D. R. Horton leads its peer group in capital return, with a 10.1% buyback yield (Yahoo Finance). This aggressive share retirement is the primary engine for its 13.9% implied EPSEPSEarnings Per Share — the company's net profit divided by its share count; the most common per-share profitability metric growth, masking the fact that its core homebuilding revenue is currently shrinking. Short interest stands at 7.1% of the float, indicating that a meaningful portion of the market remains skeptical of this buyback-fueled narrative.
4. IS IT WORTH IT AT THIS PRICE?
At 11.8x forward earnings, D. R. Horton trades at a 36% discount to the peer median of 18.4x. This "modest discount" is justified by D. R. Horton’s negative revenue growth and its 5.3% Free Cash Flow margin, which trails most peers. The market is currently pricing in approximately 3.8% long-term growth (CAPM analysis). If growth were to slow to a GDP-pace of 2.5%, the justified multiple would drop to 10.3x, representing roughly 13% downside from current levels. The current price is only "right" if D. R. Horton can stabilize its average closing prices, which fell 3% last quarter, and reverse the 7% decline in homes closed (10-Q). Given that management expects incentives to remain "elevated" through 2026, the discount to peers like Home Depot (22.0x) or Lowe’s (18.4x) reflects the higher risk profile of direct home construction versus home improvement.
5. WHAT WOULD CHANGE THIS VIEW?
- Constructive if the rental segment pre-tax income stabilizes or returns toward the $11.9 million level seen in the prior year, signaling that the diversification strategy is providing the intended counter-cyclical hedge.
- Cautious if D. R. Horton reports its first significant inventory impairment charge, which would indicate that the "non-recourse land/lot purchase contracts" are no longer sufficient to shield the balance sheet from declining market values (10-K Item 1A).
6. BOTTOM LINE
Structural Advantage: National scale and a majority stake in Forestar, which allows for land control with limited capital exposure. Bottom Line: D. R. Horton is a well-oiled machine currently stalled by interest rates, making it an attractive value play only for those betting on a rapid return to low-cost mortgages.
1. Top 5 Material Risks
- Cyclical Economic Sensitivity: D. R. Horton’s operations are highly sensitive to employment levels, consumer confidence, and interest rates. The Federal Reserve’s recent interest rate hikes have increased mortgage rates, reducing home affordability and forcing D. R. Horton to utilize pricing adjustments and incentives that impact profitability (10-K Item 1A).
- Inventory and Asset Impairment: D. R. Horton faces substantial risks regarding its land, lot, and rental inventory. A decline in housing demand may prevent the profitable sale of these assets, potentially forcing D. R. Horton to record inventory impairment charges or sell properties at lower profit margins (10-K Item 1A).
- Financial Services Segment Exposure: The financial services business is closely tied to homebuilding. A decrease in home demand directly reduces mortgage originations. Furthermore, D. R. Horton may be required to repurchase mortgage loans or provide indemnification if errors or omissions occur in underwriting, which could adversely affect financial results (10-K Item 1A).
- Capital Market Access and Liquidity: Adverse developments in capital markets could limit D. R. Horton’s ability to access debt markets or bank financing. While D. R. Horton maintains a $2.305 billion homebuilding revolving credit facility, its liquidity depends on the stability of financial institutions and the ability to renew credit facilities (10-K Item 1A).
- Supply Chain and Labor Constraints: D. R. Horton is subject to risks regarding the availability and cost of building materials (such as lumber, drywall, and cement) and skilled labor. Disruptions in the supply chain or labor market tightness can lengthen construction cycle times and increase costs, negatively impacting profit margins (10-K Item 1A).
2. Company-Specific Risks
- Surety Bond Requirements: D. R. Horton is required to provide surety bonds to secure performance under construction and development contracts, with $3.5 billion in outstanding bonds as of September 30, 2025. Inability to obtain these bonds would adversely affect cash flows and operations (10-K Item 1A).
- Warranty and Construction Defect Claims: Due to the large volume of homes sold, D. R. Horton faces significant potential liabilities from warranty and construction defect claims. D. R. Horton has increasingly relied on self-insurance and higher retentions as insurance costs have risen (10-K Item 1A).
- Forestar and Rental Subsidiary Debt Structures: Forestar and DRH Rental maintain separate revolving credit facilities that are not guaranteed by D. R. Horton, Inc. These subsidiaries are subject to specific financial covenants, including minimum tangible net worth and liquidity requirements, which could trigger defaults independent of the parent company (10-K Item 1A).
- Activist Stockholder Actions: D. R. Horton may be subject to proposals from activist stockholders that do not align with current business strategies. Responding to such actions could be costly, time-consuming, and divert management attention from core operations (10-K Item 1A).
3. Regulatory/Legal Risks
- Financial Services Regulation: The financial services segment is subject to extensive oversight by agencies including the Consumer Financial Protection Bureau, the FHA, and the VA. Changes in regulations or lending standards could restrict the availability of financing for D. R. Horton’s customers (10-K Item 1A).
- Environmental and Climate Disclosure: D. R. Horton is subject to complex environmental laws that can restrict development. Additionally, new SEC and state-level climate-related disclosure rules may increase compliance costs and the complexity of reporting requirements (10-K Item 1A).
- Data Privacy and Cybersecurity: D. R. Horton collects and stores sensitive information regarding homebuyers and employees. Failure to comply with evolving privacy regulations, such as the California Privacy Rights Act, or a material cybersecurity breach could result in significant penalties, litigation, and reputational damage (10-K Item 1A).
4. Financial Impact Map
- Cyclical Economic Conditions → Homebuilding Revenue → Reduced demand and increased contract cancellations in backlog.
- Inventory Risks → Inventory / Assets → Potential for substantial inventory impairment charges and write-offs.
- Mortgage Repurchase Obligations → Financial Services Segment Earnings → Reserves for estimated losses and future repurchase obligations for loans sold to third parties.
- Increased Mortgage Interest Rates → Gross Margins → Pricing adjustments and incentives required to maintain sales volume.
- Surety Bond Unavailability → Cash Flows → Inability to secure performance obligations under construction and development agreements.
Recent Filings
| Form | Filed | Period |
|---|---|---|
| 10-Q | Jan 2026 | Dec 2025 |
| 8-K | Jan 2026 | — |
| 14A | Dec 2025 | — |
| 10-K | Nov 2025 | Sep 2025 |