If You Invested $1000 in D.R. Horton 10 Years Ago, This Is How Much You'd Have Now
For most investors, how much a stock's price changes over time is important. This factor can impact your investment portfolio as well as help you compare investment results across sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in D.R. Horton (DHI) ten years ago? It may not have been easy to hold on to DHI for all that time, but if you did, how much would your investment be worth today?
D.R. Horton's Business In-Depth
With that in mind, let's take a look at D.R. Horton's main business drivers.
D.R. Horton, Inc., based in Texas, is one of the leading national homebuilders, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets. D.R. Horton’s operations are spread over 90 markets across 29 states in the East, Midwest, Southeast, South Central, Southwest and West regions of the United States. Its houses are sold under the brand names D.R. Horton - America’s Builder, Emerald Homes, Express Homes and Freedom Homes.
D.R. Horton operates through three segments: Homebuilding (contributing 96.7% of the total revenues in fiscal 2020), Forestar (4.6%), and Financial Services (2.9%). Notably, of the total revenues, 0.2% represents Others and 4.4% represents the elimination of intercompany transactions. The Homebuilding segment comprises six reporting regions and derives revenues primarily from the sale of completed homes built on lots it develops and on finished lots purchased ready for home construction. In addition to single-family detached homes (accounting for around 90% of home sale revenues), the segment builds attached homes, such as town homes, duplexes, triplexes and condominiums. The segment also derives revenues by selling lands and lots. The company constructs and leases homes as income-producing single-family rental communities under this segment.
As of Dec 31, 2021, the Forestar land development reporting segment has operations in 51 markets and 21 states, where it owns, directly or through joint ventures, interests in residential and mixed-use projects. During fiscal 2018, the company had acquired a 75% share of Forestar Group, which is a residential and mixed-use real estate development company. Forestar Group Inc. (FOR), a publicly-traded residential and real estate development company, is a majority-owned subsidiary of D.R. Horton.
The Financial Services segment, through the mortgage subsidiary, DHI Mortgage, provides mortgage financing and title agency services primarily to the company’s homebuilding customers.
Other Businesses — Through DHI Communities, a 100% owned subsidiary, the company develops, constructs and owns multi-family residential properties that produce rental income.
Bottom Line
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For D.R. Horton, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in March 2011 would be worth $7,027.73, or a gain of 602.77%, as of March 22, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
The S&P 500 rose 205.90% and the price of gold increased 17.32% over the same time frame in comparison.
Looking ahead, analysts are expecting more upside for DHI.
D.R. Horton’s shares have outperformed the industry over the past six months. Also, earnings estimate for the current year have been trending upward, depicting analysts’ optimism over the company’s prospects. The uptick is expected to continue, courtesy of its impressive performance, industry-leading market share, solid acquisition strategy, well-stocked supply of land, lots and homes, along with affordable product offerings across multiple brands. Improving housing market fundamentals backed by low interest/mortgage rates are encouraging. Notably, the company is benefiting from growing demand for entry-level homes. Although, rising land and labor costs are threatening the company’s margins, consistent cost reduction efforts bode well. The company is expected to perform well in fiscal 2021 and beyond.
The stock is up 6.89% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 19 higher, for fiscal 2021. The consensus estimate has moved up as well.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
To read this article on Zacks.com click here.
