D.R. Horton, Inc. (DHI) Stock Valuation — DCF Analysis
Residential Construction · NYSE
Current Price
$157.28
Intrinsic Value
$127.47
-23.4% margin of safety
COMPETITIVE MOAT
↑Scale and Geographic Diversification
D.R. Horton's extensive national footprint across numerous markets provides significant operational efficiencies and reduces reliance on any single region. This broad reach allows them to capitalize on diverse housing demands.
↑Cost Leadership and Efficiency
The company's focus on standardized building processes and bulk purchasing of materials enables them to achieve lower costs than many competitors. This cost advantage is crucial in a price-sensitive industry.
↑Brand Recognition and Trust
D.R. Horton has established a strong reputation for reliability and value over decades of operation. This brand equity can translate into customer preference and a degree of pricing power.
INVESTMENT RISKS
↓Interest Rate Sensitivity
The 'lock-in effect' of higher interest rates directly impacts affordability for new homebuyers. Sustained high rates can significantly dampen demand and pressure sales volumes.
↓Economic Downturn and Housing Cycles
The residential construction industry is highly cyclical and sensitive to broader economic conditions. A recession or significant job losses could lead to a sharp decline in housing demand and prices.
↓Regulatory and Land Development Hurdles
Navigating complex zoning laws, environmental regulations, and securing suitable land for development can be time-consuming and costly. Delays or denials can impede growth plans.
Base case
DHI base case valuation
A base case discounted cash flow model for DHI estimates an intrinsic value of about $127.47 per share, against a current price of $157.28. The model assumes -3.2% annual free cash flow growth, a 10.0% discount rate, and a 13x exit multiple.
Intrinsic Value
$127.47
Margin of safety
-23.4%
Expected annual return
-4.1%
Base case assumptions: -3.2% annual growth, 10.0% discount rate, 13x exit multiple, 5 year projection. Data as of 2026-06-15.
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)
$115.83
FCF/Share (TTM)
$12.15
ROIC (TTM)
9.7%
ROE (TTM)
13.2%
P/FCF
12.8x
EV/EBITDA
11.6x
FCF Yield
7.84%
Debt/Equity
0.28x
Based on trailing twelve-month data, DHI shows a free cash flow per share of $12.15 and a ROIC of 9.7%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 12.8x and FCF yield of 7.84% are important context metrics when evaluating DHI's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of DHI?
D.R. Horton, Inc. currently generates $12.15 in free cash flow per share. At the current price of $157.28, 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 12.8x with a free cash flow yield of 7.84%. This relatively low P/FCF may suggest the stock is attractively priced relative to its cash generation. 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 ($12.15) 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 0.28x, 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 9.7% 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 0.28x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 11.6x, 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 2026-06-15. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.