D.R. Horton (DHI) Stock Forecast & Price Target

D.R. Horton is positioned for growth that surpasses its market peers due to its significant local market share, which facilitates effective management of land and labor constraints. The company is projected to achieve sustainable return on equities (ROEs) in the mid-teens, alongside outsized earnings growth, driven by better-than-expected volumes and margins, while also benefitting from an increase in its gross margin percentage estimates. Furthermore, D.R. Horton reported strong first-quarter earnings per share of $2.61, exceeding consensus estimates, with resilient gross margins that bolstered overall positive financial performance outlook.

D.R. Horton's financial outlook appears negative largely due to a projected decline in earnings per share (EPS) for FY’25, which is estimated to decrease by 1% to $12.29, influenced by weaker order volumes and a reduction in profit margins. Additionally, the company is guiding towards a consolidated pre-tax income (PTI) margin of 13.7-14.2% for the second quarter, representing a significant year-over-year decline of 260-310 basis points, reflecting pressures on the profit margin from softening demand. Furthermore, projected orders for FY'25 are only expected to grow by 3% year-over-year, which points to potential challenges in achieving necessary growth in both orders and starts, amid a backdrop of weaker rental profits and a competitive market environment.