D.R. Horton, Inc. (DHI) Intrinsic Value & DCF Valuation
Residential Construction · NYSE
Current Price
$148.35
Intrinsic Value
$171.89
+13.7% margin of safety
What Is D.R. Horton, Inc.'s Intrinsic Value?
As of 2026-08-21, the base-case DCF model estimates the intrinsic value of D.R. Horton, Inc. (DHI) at $171.89 per share, compared with a market price of $148.35, a margin of safety of +13.7%. The base case assumes 5.4% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $132.1 to $218.13. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is D.R. Horton, Inc. (DHI) Undervalued?
At $148.35, DHI trades about 13.7% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Scale and Geographic Diversification
D.R. Horton's extensive national footprint and high volume of homes built provide significant operational efficiencies and purchasing power. This scale allows them to navigate diverse regional housing markets effectively.
↑Land Acquisition Expertise
The company's ability to secure large tracts of land at favorable terms is a key advantage. This strategic land banking reduces future development costs and ensures a pipeline of projects.
↑Brand Recognition and Builder Reputation
D.R. Horton has established a widely recognized brand in the residential construction sector. This brand equity can translate into consumer trust and preference, aiding sales.
INVESTMENT RISKS
↓Economic Downturn and Housing Market Cycles
A broad economic recession or a significant downturn in the housing market could lead to reduced demand and increased inventory, impacting sales and profitability.
↓Regulatory and Permitting Hurdles
Changes in local zoning laws, building codes, or environmental regulations can delay projects and increase construction costs. Navigating these can be complex and time-consuming.
↓Competition from Alternative Housing Solutions
Emerging trends like factory-built homes offer potential alternatives to traditional construction. These innovations could disrupt the market and challenge established builders.
Base case
DHI base case valuation
Intrinsic Value
$171.89
Margin of safety
+13.7%
Expected annual return
+3.0%
Base case assumptions: 5.4% annual growth, 10.0% discount rate, 12.54x exit multiple, 5 year projection. Data as of 2026-08-21.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the DHI valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for D.R. Horton, Inc. respond.
Open DCF Calculator for DHICompany Overview
Established in Arlington, Texas, in 1978, D.R. Horton, Inc. operates as a prominent residential construction enterprise. The company's core business involves acquiring and preparing land, then constructing and marketing homes across a substantial portion of the United States. Its operations span 31 states and 98 distinct markets, covering the East, North, Southeast, South Central, Southwest, and Northwest regions. Under several well-known brand names, including D.R. Horton, America's Builder, Express Homes, Emerald Homes, and Freedom Homes, the firm develops diverse housing types. This includes both individual detached houses and attached residences such as townhomes, duplexes, and triplexes. Beyond its primary homebuilding activities, D.R. Horton offers a range of complementary services. These encompass providing mortgage financing to its clientele, as well as furnishing title insurance, examination, and closing services. The company is also engaged in the development of residential lots. Additionally, D.R. Horton's portfolio extends to the creation, ownership, leasing, and sale of multi-family and single-family rental properties. It also holds non-residential real estate, such as ranch land and related facilities, and manages assets within the energy sector. The company primarily caters to individuals purchasing new homes.
Financial Metrics — DHI Stock Valuation Data
Revenue/Share (TTM)
$116.00
FCF/Share (TTM)
$11.51
ROIC (TTM)
8.5%
ROE (TTM)
12.8%
P/FCF
12.5x
EV/EBITDA
11.4x
FCF Yield
7.97%
Debt/Equity
0.30x
On a trailing twelve-month basis, DHI generates free cash flow per share of $11.51 alongside a ROIC of 8.5%, both central inputs for a DCF valuation. Its P/FCF ratio of 12.5x and FCF yield of 7.97% then frame how DHI is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of DHI?
D.R. Horton, Inc. currently generates $11.51 in free cash flow per share. At the current price of $148.35, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is DHI undervalued?
DHI trades at a P/FCF ratio of 12.5x with a free cash flow yield of 7.97%. A low P/FCF means investors are paying less per dollar of free cash flow; whether that is cheap depends on the company's growth, cyclicality, and capital intensity. However, whether DHI is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value DHI stock using DCF?
To perform a DCF valuation on D.R. Horton, Inc.: (1) Start with the trailing free cash flow per share ($11.51) as the base, (2) project future FCF growth over 5-10 years based on Residential Construction industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting DHI's risk profile — with a debt-to-equity of 0.30x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to DHI?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For D.R. Horton, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Residential Construction trends, then discounting those amounts to today's dollars. DHI's ROIC of 8.5% shows moderate capital returns.
How does WACC affect DHI stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For DHI, with a debt-to-equity ratio of 0.30x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 11.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See DHI PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value DHI with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-08-21. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.