D.R. Horton, Inc. (NYSE:DHI) Stock Has Shown Weakness Lately But Financials Look Strong: Should Prospective Shareholders Make The Leap?

Simply Wall St.2024-12-25

D.R. Horton (NYSE:DHI) has had a rough three months with its share price down 25%. However, stock prices are usually driven by a company’s financial performance over the long term, which in this case ...

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However, stock prices are usually driven by a company’s financial performance over the long term, which in this case ...</p>\n\n<a href=\"https://finance.yahoo.com/news/d-r-horton-inc-nyse-145818530.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>D.R. Horton, Inc. 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Horton, Inc. (NYSE:DHI) Stock Has Shown Weakness Lately But Financials Look Strong: Should Prospective Shareholders Make The Leap?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-25 22:58 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/d-r-horton-inc-nyse-145818530.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>D.R. Horton (NYSE:DHI) has had a rough three months with its share price down 25%. However, stock prices are usually driven by a company’s financial performance over the long term, which in this case ...</p>\n\n<a href=\"https://finance.yahoo.com/news/d-r-horton-inc-nyse-145818530.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0208291251.USD","symbol_name":"FRANKLIN MUTUAL U.S. VALUE \"A\" (USD) INC","start_time":0,"source_url":"https://finance.yahoo.com/news/d-r-horton-inc-nyse-145818530.html","article_id":"2494218990","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/JTOl0BFk4.SvFXeiXQgFbg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/7a3247b09aa49d6f85894caffcf9e69e"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2494218990","pubTimestamp":1735138698,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"D.R. Horton  has had a rough three months with its share price down 25%. However, stock prices are usually driven by a company’s financial performance over the long term, which in this case looks quite promising. Specifically, we decided to study D.R. Horton's  ROE in this article.Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits.Return on Equity = Net Profit  ÷ Shareholders' Equity. So, based on the above formula, the ROE for D.R. Horton is:. A Side By Side comparison of D.R. Horton's Earnings Growth And 19% ROE. Moreover, D.R. 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However, stock prices are usually driven by a company’s financial performance over the long term, which in this case looks quite promising. Specifically, we decided to study D.R. Horton's  ROE in this article. \n Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. Put another way, it reveals the company's success at turning shareholder investments into profits. \n See our latest analysis for D.R. Horton \n How To Calculate Return On Equity? \n The formula for return on equity is: \n Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity \nSo, based on the above formula, the ROE for D.R. Horton is:\n19% = US$4.8b ÷ US$26b (Based on the trailing twelve months to September 2024).\n The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each $1 of shareholders' capital it has, the company made $0.19 in profit. \n What Has ROE Got To Do With Earnings Growth? \n So far, we've learned that ROE is a measure of a company's profitability. We now need to evaluate how much profit the company reinvests or \"retains\" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. \n A Side By Side comparison of D.R. Horton's Earnings Growth And 19% ROE \n At first glance, D.R. Horton seems to have a decent ROE. Further, the company's ROE is similar to the industry average of 16%. Consequently, this likely laid the ground for the decent growth of 19% seen over the past five years by D.R. Horton. \n We then performed a comparison between D.R. Horton's net income growth with the industry, which revealed that the company's growth is similar to the average industry growth of 19% in the same 5-year period. \n\n\n\n  NYSE:DHI Past Earnings Growth December 25th 2024\n \n\n Earnings growth is an important metric to consider when valuing a stock. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Has the market priced in the future outlook for DHI? You can find out in our latest intrinsic value infographic research report.  \n Is D.R. Horton Efficiently Re-investing Its Profits? \n D.R. Horton has a low three-year median payout ratio of 6.9%, meaning that the company retains the remaining 93% of its profits. This suggests that the management is reinvesting most of the profits to grow the business. \n Moreover, D.R. Horton is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Our latest analyst data shows that the future payout ratio of the company is expected to rise to 11% over the next three years. Despite the higher expected payout ratio, the company's ROE is not expected to change by much. \n Summary \n In total, we are pretty happy with D.R. Horton's performance. Particularly, we like that the company is reinvesting heavily into its business, and at a high rate of return. Unsurprisingly, this has led to an impressive earnings growth. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. 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