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Valued at a market cap of $42 billion, D.R. Horton, Inc. (DHI) is a homebuilding company, primarily engaged in the construction and sale of single-family houses both in the entry-level and move-up markets. The Arlington, Texas-based company also provides mortgage financing services, title insurance policies, examination, and closing services, and engages in the residential lot development business as well.
Companies worth $10 billion or more are typically classified as “large-cap stocks,” and DHI fits the label perfectly, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the residential construction industry. The company benefits from a broad geographic footprint, allowing it to serve diverse housing markets across the country. Its diversified product offerings, ranging from entry-level to luxury homes, help attract a wide customer base.
Despite its notable strength, this home construction company has slipped 33% from its 52-week high of $199.85, reached on Sep. 19, 2024. Moreover, it has declined 14.7% over the past three months, lagging behind the broader Dow Jones Industrials Average’s ($DOWI) 5.1% dip over the same time frame.
In the longer term, D.R. Horton's shares have plunged 12.8% over the past 52 weeks, considerably underperforming DOWI’s 8.1% return. Moreover, on a YTD basis, DHI stock is down 4.2%, compared to DOWI’s 1.5% loss over the same time frame.
To confirm its bearish trend, DHI has been trading below its 200-day moving average since early December, and has remained below its 50-day moving average since late October 2024.
On Jan. 21, DHI plunged 2.7% after its Q1 earnings release despite delivering better-than-expected net income of $2.61 per share and revenue of $7.6 billion. However, the top line declined 1.5% year-over-year, while the bottom line fell 7.4% from the year-ago quarter, mainly due to a decrease in net sales orders and lower revenue from the company's financial services segment. This top and bottom-line decline might have weighed on investor sentiment and led to DHI's downward price movement.
DHI’s underperformance becomes even more evident when compared to its rival, KB Home (KBH), which declined 7.9% over the past 52 weeks and nearly 2.7% on a YTD basis.
Despite D.R. Horton’s recent underperformance, analysts remain moderately optimistic about its prospects. The stock has a consensus rating of “Moderate Buy” from the 19 analysts covering it, and the mean price target of $171.51 suggests a 28% premium to its current levels.
