Let's talk about the popular D.R. Horton, Inc. (NYSE:DHI). The company's shares saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s take a look at D.R. Horton’s outlook and value based on the most recent financial data to see if the opportunity still exists.
What's the opportunity in D.R. Horton?
According to my valuation model, D.R. Horton seems to be fairly priced at around 4.25% above my intrinsic value, which means if you buy D.R. Horton today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $30.83, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, D.R. Horton’s low beta implies that the stock is less volatile than the wider market.
What kind of growth will D.R. Horton generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of D.R. Horton, it is expected to deliver a relatively unexciting earnings growth of 5.2%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? DHI’s future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on DHI, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on D.R. Horton. You can find everything you need to know about D.R. Horton in the latest infographic research report. If you are no longer interested in D.R. Horton, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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