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D.R. Horton (DHI) Gains But Lags Market: What You Should Know

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D.R. Horton (DHI - Free Report) closed the most recent trading day at $78.09, moving +0.49% from the previous trading session. This change lagged the S&P 500's 0.88% gain on the day. Meanwhile, the Dow gained 0.57%, and the Nasdaq, a tech-heavy index, added 1.39%.

Heading into today, shares of the homebuilder had gained 11.44% over the past month, outpacing the Construction sector's gain of 10.59% and the S&P 500's gain of 3.54% in that time.

DHI will be looking to display strength as it nears its next earnings release, which is expected to be November 10, 2020. In that report, analysts expect DHI to post earnings of $1.75 per share. This would mark year-over-year growth of 29.63%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.80 billion, up 16.56% from the year-ago period.

Investors might also notice recent changes to analyst estimates for DHI. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. DHI is currently a Zacks Rank #3 (Hold).

In terms of valuation, DHI is currently trading at a Forward P/E ratio of 11.83. This valuation marks a premium compared to its industry's average Forward P/E of 11.76.

Also, we should mention that DHI has a PEG ratio of 0.86. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Building Products - Home Builders industry currently had an average PEG ratio of 0.94 as of yesterday's close.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 21, putting it in the top 9% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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