D.R. Horton Inc (DHI, Financial), a leading homebuilder in the United States, has recently garnered significant attention from investors and financial analysts due to its robust financial stance. Despite a slight decline of 1.72% over a period, the company has seen a three-month change of 4.66%. Currently priced at $115.3 per share, D.R. Horton Inc’s financial metrics, as evaluated by the GuruFocus Score Rating, suggest a promising trajectory for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus. It uses five aspects of valuation, which have been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. Stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, investors should consider companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
D.R. Horton Inc has been assigned a GF Score of 95 out of 100, signaling the highest outperformance potential. This score is calculated based on the following ranks:
- Financial strength rank: 7/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 5/10
- Momentum rank: 6/10
Understanding D.R. Horton Inc’s Business
With a market cap of $39.03 billion and sales of $34.59 billion, D.R. Horton Inc operates in 110 markets across 33 states in the United States. The company primarily builds single-family detached homes and offers products to entry-level, move-up, luxury buyers, and active adults. Additionally, D.R. Horton Inc provides homebuyers with mortgage financing and title agency services through its financial services segment. The company’s headquarters are in Arlington, Texas, and it manages six regional segments across the United States.
Financial Strength Breakdown
According to the Financial Strength rating, D.R. Horton Inc’s robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The company’s Interest Coverage ratio stands impressively at 9999, underscoring its strong capability to cover its interest obligations. With an Altman Z-Score of 6.06, D.R. Horton Inc exhibits a strong defense against financial distress. Furthermore, a favorable Debt-to-Revenue ratio of 0.18 solidifies D.R. Horton Inc’s financial health.
Profitability Rank Breakdown
The Profitability Rank shows D.R. Horton Inc’s impressive standing among its peers in generating profit. The company’s Operating Margin has increased over the past five years, and its Gross Margin has seen a consistent rise over the same period. This trend underscores the company’s growing proficiency in transforming revenue into profit. Furthermore, D.R. Horton Inc’s strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, D.R. Horton Inc demonstrates a strong commitment to expanding its business. The company’s 3-Year Revenue Growth Rate is 26.5%, which outperforms better than 88.12% of 101 companies in the Homebuilding & Construction industry. Moreover, D.R. Horton Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years.
Conclusion
Given D.R. Horton Inc’s financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm’s unparalleled position for potential outperformance. This analysis underscores the company’s robust financial health, consistent profitability, and impressive growth, making it a compelling investment opportunity for value investors.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
