D.R. Horton Inc (DHI, Financial), a leading homebuilder in the United States, has recently garnered significant attention from investors and financial analysts due to its robust financial stance. With shares currently priced at $115.18, D.R. Horton Inc has experienced a decline of 4.16% over a period, contrasted against a three-month change of 3.54%. A comprehensive analysis, underscored by the GuruFocus Score Rating, indicates that D.R. Horton Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. Stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
For D.R. Horton Inc, the GF Score components are as follows:
- 1. Financial strength rank: 7/10
- 2. Profitability rank: 10/10
- 3. Growth rank: 10/10
- 4. GF Value rank: 5/10
- 5. Momentum rank: 6/10
Each of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and a slightly lower GF Value rank, GuruFocus assigned D.R. Horton Inc the GF Score of 95 out of 100, which signals the highest outperformance potential.
Understanding D.R. Horton Inc's Business
D.R. Horton Inc, with a market cap of $38.965 billion and sales of $34.595 billion, operates in 110 markets across 33 states in the United States. The company primarily builds single-family detached homes (over 90% of home sales revenue) and offers products to entry-level, move-up, luxury buyers, and active adults. D.R. Horton Inc also provides homebuyers with mortgage financing and title agency services through its financial services segment. The company's headquarters are in Arlington, Texas, and it manages six regional segments across the United States.
Financial Strength Breakdown
According to the Financial Strength rating, D.R. Horton Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. With an Altman Z-Score of 6.12, D.R. Horton Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.18, D.R. Horton Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows D.R. Horton Inc's impressive standing among its peers in generating profit. D.R. Horton Inc's Operating Margin has increased (80.01%) over the past five years, as shown by the following data: 2019: 11.59; 2020: 14.23; 2021: 19.15; 2022: 22.61; 2023: 22.33. Furthermore, D.R. Horton Inc's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2019: 22.01; 2020: 24.31; 2021: 28.35; 2022: 31.37; 2023: 30.98. This trend underscores the company's growing proficiency in transforming revenue into profit. D.R. Horton Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, D.R. Horton Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 26.5%, which outperforms better than 88.24% of 102 companies in the Homebuilding & Construction industry. Moreover, D.R. Horton Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 56.8, and the rate over the past five years is 38.7. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given D.R. Horton Inc's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.
