Stock Review of the Day
Stock:  DHI (D.R. Horton)
Summary:  ON SALE

Score:  17/20
MOS:  67%
Share Price:  $72
Sticker Price:  $226

D.R. Horton is the largest home builder in the US based on construction volume.  They were founded in 1978 and are based out of Arlington, TX.  They operate in 29 states and have 7,700 employees.

D.R. Horton has been the largest home builder in the US based on volume for the last 10 years.  Here are 2019 statistics compared to the competition…

  • D.R. Horton:  58,000 home closings
  • Lennar Corp:  51,000 home closings
  • PulteGroup:  23,000 home closings
  • NVR:  19,000 home closings
  • KB Home:  11,000 home closings

Here is a quick snapshot on how the competition stacks up within TYKR.

Stock:  LEN (Lennar Corp)
Summary:  OVERPRICED
Score:  9/20
MOS:  0%
Share Price:  $72
Sticker Price:  $52

Stock:  PHM (PulteGroup)
Summary:  WATCH
Score:  11/20
MOS:  36%
Share Price:  $41
Sticker Price:  $65

Stock:  NVR (NVR)
Summary:  ON SALE
Score:  12/20
MOS:  60%
Share Price:  $3,960
Sticker Price:  $3,000+

Stock:  KBH (KB Home)
Summary: ON SALE
Score:  10/20
MOS:  79%
Share Price:  $34
Sticker Price:  $171

When observing the competition, the only real competitor regarding volume is LEN and they are well OVERPRICED.   As for NVR and KBH, they are both ON SALE but their scores (12/20 and 10/20) do not compare to the standout DHI score of 17/20.

If you didn’t already know, the US housing market has an inventory issue.  In other words, we’re running out of houses which has caused house prices to surge to all time highs.  Here are some interesting statistics on the US housing market sited by biggerpockets.com.

  • House sales have surged by 20% from 2019 to 2020.
  • The average listing time dropped from 46 days to 39 days from 2019 to 2020.
  • House prices have soared 14% from 2019 to 2020 with the average house cost being $333,900.

Roofstock.com is also estimating that by 2025, millennials are expected to form more than 20 million new households.

So, if we have declining inventory and an estimation that millennials will form new households, this means two industries will be positively impacted:

1.  Rental properties.
2.  New housing construction.  That’s where D.R. Horton comes into play.

Investors.com recently listed D.R. Horton as one of the Top 50 companies to pay attention to.  Here are some impressive statistics sited within the article.

  • Since the COVID dip in March of 2020, the D.R. Horton share price is up 200% this year.
  • They have a near perfect EPS rating of 99/100.  Their EPS grew by 50% over the last year.

Now let’s take a closer look at the numbers.

  • Revenue is up 20% over the last quarter
  • Net Income is up 30% over the last quarter
  • EPS is up 30% over the last quarter
  • Free Cash Flow is up nearly 50% over the last quarter

Overall, the financials are very impressive.  Within TYKR, reaching a score of 17/20 is difficult.  D.R. Horton is currently ranked #7 on the TOP 50 ON SALE.  With a MOS of 67% (Share Price of $72 vs Sticker Price of $226) this stock has solid upside potential. Not only do they have impressive financials but they are in the perfect storm.  With house inventory declining, people have two options.  They can either rent or build and it looks like the home building industry isn’t slowing down any time soon.

What do you think?

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All stock reviews are for entertainment purposes only. Reviews are not financial advice.

Blog Post Author
Sean Tepper