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D.R. Horton (DHI) Gains As Market Dips: What You Should Know

Zacks Equity Research
·3 min read

In the latest trading session, D.R. Horton (DHI) closed at $68.06, marking a +1.64% move from the previous day. The stock outpaced the S&P 500's daily loss of 0.66%. Elsewhere, the Dow lost 0.29%, while the tech-heavy Nasdaq lost 1.25%.

Heading into today, shares of the homebuilder had lost 4.3% over the past month, lagging the Construction sector's gain of 5.51% and the S&P 500's gain of 3.42% in that time.

DHI will be looking to display strength as it nears its next earnings release, which is expected to be January 26, 2021. On that day, DHI is projected to report earnings of $1.72 per share, which would represent year-over-year growth of 73.74%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.64 billion, up 40.19% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.92 per share and revenue of $25.47 billion, which would represent changes of +23.56% and +25.38%, respectively, from the prior year.

Any recent changes to analyst estimates for DHI should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. DHI currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, DHI is currently trading at a Forward P/E ratio of 8.45. Its industry sports an average Forward P/E of 7.77, so we one might conclude that DHI is trading at a premium comparatively.

We can also see that DHI currently has a PEG ratio of 0.66. 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. The Building Products - Home Builders was holding an average PEG ratio of 0.6 at yesterday's closing price.

The Building Products - Home Builders industry is part of the Construction sector. This industry currently has a Zacks Industry Rank of 21, which puts it in the top 9% 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.

To follow DHI in the coming trading sessions, be sure to utilize Zacks.com.


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