Is DR Horton Inc (DHI) overvalued?
On Equity Rank's model estimate, DHI trades 56% above its fair value. DR Horton Inc (DHI) last closed at $152.28; the multi-method model fair value is $97.80.
| Price | Model fair value | Price vs model |
|---|---|---|
| $152.28 | $97.80 | 56% above |
What the answer rests on
- 1 of 12 valuation methods put DHI's value above its price and 11 put it below, so the methods mostly agree.
- To justify today's price, DHI's free cash flow would need to grow about 3.1% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -7.0% a year.
- DHI trades at 15.5 times its last year's earnings, against a median of 16.0 for 15 profitable Homebuilders companies.
- Over the past year the price sat below the model fair value on 0% of trading days. The gap ranged from 28% above to 82% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind DHI's fair value · What prices assume · Other companies