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D.R. Horton (DHI) Gains But Lags Market: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, D.R. Horton (DHI) closed at $69.46, marking a +0.4% move from the previous day. This move lagged the S&P 500's daily gain of 1.78%. At the same time, the Dow added 2.06%, and the tech-heavy Nasdaq gained 1.85%.

Prior to today's trading, shares of the homebuilder had lost 8.61% over the past month. This has lagged the Construction sector's loss of 1.29% and the S&P 500's loss of 1.1% in that time.

Wall Street will be looking for positivity from DHI as it approaches its next earnings report date. This is expected to be November 10, 2020. In that report, analysts expect DHI to post earnings of $1.76 per share. This would mark year-over-year growth of 30.37%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.88 billion, up 18.17% from the year-ago period.

Investors should also note any recent changes to analyst estimates for DHI. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 4.15% higher within the past month. DHI is currently a Zacks Rank #3 (Hold).

Investors should also note DHI's current valuation metrics, including its Forward P/E ratio of 10.06. Its industry sports an average Forward P/E of 9.64, so we one might conclude that DHI is trading at a premium comparatively.

Meanwhile, DHI's PEG ratio is currently 0.68. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Building Products - Home Builders stocks are, on average, holding a PEG ratio of 0.68 based on yesterday's closing prices.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 6, putting it in the top 3% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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