DR Horton (DHI) is riding a wave of relative strength, while trading at a discount to operating earnings and EBITDA. At the same time, the drop in the 10 year yield, among other durations, is accelerating, Many would-be home buyers that were looking to purchase a home are likely to start finalizing deals they’ve put off until now.
DRHorton Stock – Daily Chart
Michael Rehaut at JPM a week ago thought (DHI) had a premium valuation that fairly reflected its above-average fundamentals, “thereby driving our outlook for the stock to perform more in-line with its peers,” he wrote in a note, cutting the stock to Neutral from Overweight. source: SeekingAlpha
The analyst did not mention the stock was trading at a discount to EBITDA or Operating Earnings.
DHI, up more than 11% from the January 2023 start, is trading at ~7.27 times FY23 EPS estimate compared with its large-cap peers’ average of ~8 times. DRHorton normally trades at 10x.
The stock has a 92 EPS Rating, with its quarterly and longer-term annual earnings growth topping 92% of all stocks.
DRHorton has an Accumulation/Distribution Rating of B- which shows moderate buying by institutional investors over the last 13 weeks.
“The market is now projecting a Fed Funds rate of 4.10% by the July meeiting, or just under 50 bps of cuts from current levels. This was 5.66% last Wednesday. That’s 150 basis points of loosening policy in less than a week.” Source: Bespoke