QS Research · Michael Burry's Scion Capital analyst template · 2006
HORTON D R INC /DE/ (DHI)
As of 2026-11-11 · 12/15 boxes filled from SEC filings and market data
Report price $149.70 (close 2026-11-10)
Conclusion: PASS
Conviction medium · base case -7% · downside -32% · upside 0%
The market is not missing the housing downturn: DHI has already fallen 12.3% from its 52-week high and trades at 13.7x TTM P/E, but the independent anchor is 12.75x, giving a base of $139.32 (-7%). At today's 13.7x P/E, TTM net income of $3.05B on 279.70M shares supports roughly today's $149.70 (0% upside); a 20% cut to TTM net income ($3.05B to ~$2.44B) at the code's compressed ~11.65x P/E gives ~$101.6 (-32%). The balance sheet and cash returns are real — net cash $2.08B at 2026-06-30, ROIC 14.2% vs WACC 7.1%, 7.6% FCF yield and 6.93% net buyback yield — and FY2026 operating cash flow was $3.5B with $7.2B liquidity. But Q4 FY2026 EPS missed, orders fell 7%, cancellations rose to 23%, and FY2027 revenue is guided to $30-$32B with incentives elevated, so the earnings base is still falling. With base -7%, downside -32% and upside 0%, the risk/reward is not an edge either way; I pass.
Key numbers
- Share price: $149.70
- Market cap: $41.87B
- Latest financial period: TTM to Jun 30, 2026
- Revenue (TTM): $33.35B
- EV / EBITDA (TTM): 9.5x
- P/E (TTM): 13.7x
- FCF yield: 7.6%
- Price / book: 1.76x
- EV / FCF (TTM): 12.4x
- Revenue growth (latest fiscal year): -6.9%
- ROIC (TTM): 14.2%
- WACC: 7.1%
- Economic profit spread: +7.1 pts
The 15 boxes
- ✓ 1. Long-form business notes
D.R. Horton is primarily a homebuilder: FY2025 homebuilding generated 92% of $34.3B consolidated revenue, with 84,863 homes closed at a $370,400 average price. From FY2020 to FY2025 it expanded from 88 markets/29 states and 65,388 closings to 126 markets/36 states and 84,863 closings, added a separately reported rental segment, and reduced Forestar ownership to 62%. Operating cash flow was $3.42B in FY2025 and $3.35B on TTM to 2026-06-30, while buybacks were $4.30B and $2.90B and diluted shares fell from 370.20M in FY2020 to 284.20M TTM.
- ✓ 2. Competitive advantage
The provided FY2025 10-K frames DHI as a participant in a 'highly competitive' housing market with no durable advantage asserted: it competes with local, regional and national builders, existing homes, rental properties and mortgage/title providers on price, location, quality, design and financing terms. The margin record is the tell: pre-tax income fell from $7.63B in FY2022 to $4.74B in FY2025 and $4.10B in the TTM to 2026-06-30 while revenue stayed around $33-34B, and net income fell even as total equity rose. Cash generation and buybacks are large ($3.42B operating cash flow and $4.30B buybacks in FY2025), but the profit history points to a cyclical price-taker, not a moat.
- ✓ 3. 10-Q takeaways
Q3 2026 (three months ended June 30, 2026) was flat-to-slightly-up on volume but lower on margins: consolidated revenue was essentially unchanged at $9.2B, pre-tax income fell 10% to $1.2B (13.3% margin), and net income attributable to DHI fell 12% to $904.9M. Homebuilding closings rose 4% to 23,983 while the average price fell 2%, home sales gross margin fell to 20.7% from 21.8%, and SG&A rose to 8.3% of homebuilding revenue. Inventory rose to $21.3B, homebuilding cash fell to $1.3B, but total liquidity was $6.1B; the company bought back $615.7M of stock in Q3 and gave FY2026 numeric guidance. The only risk-factor diff source is the FY2025 10-K vs FY2024 10-K, not the Q3 2026 10-Q.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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