D.R. Horton (DHI) Laps the Stock Market: Here’s Why

D.R. Horton (DHI) closed the most recent trading day at $139.61, moving +1.73% from the previous trading session. The stock outperformed the S&P 500, which registered a daily gain of 1.09%. Meanwhile, the Dow gained 1.18%, and the Nasdaq, a tech-heavy index, added 1.03%.

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The homebuilder’s shares have seen a decrease of 15.21% over the last month, not keeping up with the Construction sector’s loss of 8.88% and the S&P 500’s loss of 0.71%.

Investors will be eagerly watching for the performance of D.R. Horton in its upcoming earnings disclosure. The company’s earnings report is set to be unveiled on January 21, 2025. The company’s upcoming EPS is projected at $2.39, signifying a 15.25% drop compared to the same quarter of the previous year. Meanwhile, the latest consensus estimate predicts the revenue to be $7.16 billion, indicating a 7.35% decrease compared to the same quarter of the previous year.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $14 per share and revenue of $37.22 billion. These totals would mark changes of -2.37% and +1.15%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for D.R. Horton. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

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Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 2.37% downward. As of now, D.R. Horton holds a Zacks Rank of #4 (Sell).

In the context of valuation, D.R. Horton is at present trading with a Forward P/E ratio of 9.8. This represents a premium compared to its industry’s average Forward P/E of 7.94.

Investors should also note that DHI has a PEG ratio of 0.52 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock’s expected earnings growth rate. The Building Products – Home Builders was holding an average PEG ratio of 0.68 at yesterday’s closing price.

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