Unveiling the Investment Potential of D.R. Horton Inc (DHI): A Comprehensive Analysis of Financial Strength, Profitability, and Growth

Delving into the financial metrics and competitive strengths that position D.R. Horton Inc (DHI) for market outperformance

D.R. Horton Inc (DHI, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $108.33, D.R. Horton Inc has witnessed a daily loss of 4.3%, marked against a three-month change of -8.43%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests 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. The 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:

Each one 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 high ranks in financial strength, profitability, and growth, and moderate ranks in GF value and momentum, GuruFocus assigned D.R. Horton Inc the GF Score of 96 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 $36.65 billion and sales of $34.60 billion, is a leading homebuilder in the United States with operations in 110 markets across 33 states. The company mainly builds single-family detached homes (over 90% of home sales revenue) and offers products to entry-level, move-up, luxury buyers, and active adults. The company offers homebuyers mortgage financing and title agency services through its financial services segment. D.R. Horton's headquarters are in Arlington, Texas, and it manages six regional segments across the United States. The company's operating margin stands at 17.95%, indicating its efficiency in converting sales into actual profit.


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 5.99, 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 (78.35%) over the past five years, as shown by the following data: 2019: 11.59; 2020: 14.23; 2021: 19.15; 2022: 22.61; 2023: 22.12. 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: 30.70. 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 87.13% of 101 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.



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 comprehensive analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment choice for value investors. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen.


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