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Valens Research

DHI - Embedded Expectations Analysis - 2021 05 14

D.R. Horton, Inc. (DHI:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with a 9.5x Uniform P/E, implying bearish expectations for the firm. However, given management's excitement about home sales growth and confidence about return optimization and rising closing prices, market expectations are overly bearish, suggesting equity upside is warranted going forward

Specifically, generated an excitement marker when stating they sold 14,200 more homes in H1 2021 compared to H1 2020. Moreover, they are confident they are managing the incentives and sales pace of their communities for optimal returns and that their multi-family rental operations have 8 projects under construction and 4 in the lease-up phase. Furthermore, management is confident lagging appraisals have not been a significant impediment to sales prices and that people are looking to move away from apartments and downtown areas. They are also confident in their ability to generate good returns for shareholders
Underlying
D.R. Horton Inc.

D.R. Horton is a homebuilding company. The company's business operations consist of homebuilding, a majority-owned residential lot development company, financial services and other activities. The company's financial services operations provide mortgage financing and title agency services to homebuyers in its homebuilding markets. The company's subsidiary, DHI Mortgage, provides mortgage financing services primarily to its homebuyers and generally sells the mortgages it originates and the related servicing rights to third-party purchasers. The company's subsidiary title companies serve as title insurance agents by providing title insurance policies, examination and closing services, primarily to its homebuyers.

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Valens Research
Valens Research

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