Company Overview
D.R. Horton, Inc. functions as a major homebuilding entity operating across the East, North, Southeast, South Central, Southwest, and Northwest regions of the United States, engaging in the acquisition and development of land as well as the construction and sale of residential homes in 126 markets spanning 36 states. The company operates within the Consumer Cyclical sector, specifically the Residential Construction industry, positioning it as a primary beneficiary of housing demand cycles and sensitive to broader economic shifts affecting consumer spending on durable goods. In terms of scale, the firm holds a market capitalization of $39.06B and generates $33.52B in annual revenue supported by a workforce of 14,341 employees. These valuation and revenue figures indicate that D.R. Horton is a dominant market participant with significant asset liquidity, allowing it to sustain large-scale operations and maintain substantial cash reserves relative to its peer group.
Financial Health
The company reported total revenue of $33.52B, net income of $3.34B, and EBITDA of $4.47B for the trailing twelve months, revealing a cost structure where operating expenses consume a significant portion of top-line revenue before reaching the bottom line. The gap between the $33.52B revenue and the $3.34B net income illustrates that after accounting for cost of goods sold, labor, overhead, and taxes, the company retains approximately 9.9% of sales as profit, while the difference between EBITDA and net income highlights the impact of interest expenses, depreciation, and amortization on final earnings. Free cash flow stands at -$546,750,016, which indicates that the company's capital expenditures and working capital requirements currently exceed its operating cash generation, reducing immediate financial flexibility for internal reinvestment or debt reduction. Analyzing the margins, the gross margin is 22.1%, the operating margin is 11.0%, and the profit margin is 9.9%; these levels suggest a business model with moderate pricing power where operating leverage is critical to converting gross profits into net earnings. On the balance sheet, the company holds $2.51B in cash against $5.62B in debt, resulting in a debt-to-equity ratio of 22.87, which signifies a leveraged capital structure typical for the capital-intensive homebuilding industry where debt financing is a primary source of funding. The current ratio is 6.33, indicating an extremely robust short-term liquidity position where current assets vastly exceed current liabilities, providing ample buffer against immediate obligations. Return on Equity is 13.5% and Return on Assets is 7.8%, metrics that reveal management's effectiveness in generating returns from shareholder equity and utilizing the total asset base to produce earnings.
Valuation Assessment
The trailing twelve-month P/E ratio is 12.21, while the forward P/E is 10.90, implying that the market expects earnings to increase in the coming year as the forward multiple reflects a lower price relative to anticipated future earnings. The price-to-book ratio is 1.62, indicating that the stock trades at a 62% premium over its book value, suggesting the market values the company's intangible assets, brand strength, and land inventory above the historical cost of its tangible assets. Alternative valuation metrics include a price-to-sales ratio of 1.17 and an EV/EBITDA of 9.53, which suggest the company is valued at slightly more than one dollar of sales and offers earnings relative to enterprise value that are competitive within the construction sector. The stock's 52-week trading range spans from a low of $110.44 to a high of $184.55, providing a clear context for current price volatility and potential downside or upside boundaries based on recent market sentiment. The beta value is 1.41, meaning the stock exhibits 41% higher volatility than the broader market, reflecting the heightened sensitivity of the residential construction industry to interest rate fluctuations and economic downturns.
Growth & Income
For the trailing twelve months, revenue growth is -9.5% and earnings growth is -22.2%, indicating that earnings are declining at a significantly faster rate than revenue, which often points to margin compression or a sharp contraction in volume that disproportionately impacts profitability. The company does not pay dividends to shareholders, as evidenced by the dividend yield of 1.3% and payout ratio of 15.0%, which suggests a strategy of retaining earnings to fund operations and growth rather than distributing cash to investors. The overall growth and income profile reflects a cyclical business currently experiencing contraction in both top-line sales and bottom-line earnings, with a capital allocation strategy focused on retention rather than dividend distribution.