What's Happening With D.R. Horton Stock?

Company Overview - D.R. Horton (NYSE: DHI) has experienced a 12% increase in stock price over the past month, outperforming the S&P 500's 4% rise, despite missing earnings expectations recently [2] - The company's stock is currently trading around $140, significantly below its 52-week peak of $197, indicating a potentially attractive valuation compared to the broader market [4] Industry Trends - Confidence in the housing market is improving as mortgage rates have decreased from nearly 7% to approximately 6%, enhancing affordability and encouraging buyer activity [3] - The National Association of Realtors projects that if mortgage rates remain near 6%, around 6.2 million households may afford a median-priced home, potentially stimulating sales for homebuilders [3] Financial Performance - D.R. Horton has shown average revenue growth of 5.3% annually over the past three years, slightly below the S&P 500's 5.5% [5] - In the last year, the company's revenue fell by 4.7% to $35 billion, and in the most recent quarter, sales decreased by 15.1% year-over-year to $7.7 billion [5] - The company maintains an operating margin of 15.1% and a net income margin of 12.2%, but its operating cash flow margin of 8.1% lags behind the S&P 500's average of 14.9% [5] Financial Stability - D.R. Horton has $6.6 billion in debt and a debt-to-equity ratio of 16.1%, which is slightly better than the S&P 500's 19.4% [5] - The company possesses $2.5 billion in cash, representing about 6.9% of its total assets, providing some financial flexibility [5] Conclusion - While D.R. Horton's valuation may appear inexpensive, it is arguably justified due to weak recent growth and average profitability [6] - The stock has potential upside if housing indicators continue to improve, but mixed fundamentals suggest a cautious approach at current prices [6]