Key Stats for D.R. Horton Stock
- Past-week performance: +7.8%
- 52-week range: $110 to $185
- Valuation model target price: $177
- Implied upside: 12.4% over 2.7 years
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What Happened?
D.R. Horton (DHI) stock rose about 8% over the past week after President Donald Trump ordered $200 billion in mortgage bond purchases in an effort to push mortgage rates lower and make housing more affordable.
With rates holding relatively steady during the week, near-term pressure on affordability eased, improving sentiment around new home demand, particularly in entry-level housing.
The rally unfolded over multiple sessions rather than a single headline, indicating investors were reassessing downside risks tied to rates and demand rather than reacting to company-specific news.
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Is D.R. Horton Undervalued?
D.R. Horton is trading at a valuation that assumes housing demand remains resilient enough for large builders to sustain earnings in a higher-rate environment. Under valuation model assumptions realized through 10/31/28, the stock is valued using:
- Revenue growth (CAGR): 4.4%
- Operating margins: 11.2%
- Exit P/E multiple: 11.0x
Based on these inputs, the model estimates a target price of $177, implying a 12.4% total return from the current share price and a 4.4% annualized return over the next 2.7 years.
Performance over the next year depends on whether order momentum in entry-level communities holds as mortgage rates fluctuate. Because first-time buyers are more payment-sensitive, even modest rate stability can meaningfully support absorption and backlog conversion.
Cost discipline remains a key driver. Managing incentives, construction timelines, and input costs directly affects margins as volumes normalize, especially at D.R. Horton’s scale.
Land strategy also matters. Maintaining discipline around land purchases and prioritizing faster-turn communities helps protect returns on capital and supports earnings durability, reinforcing the market’s current confidence in the stock.
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