DHI
D.R. Horton, Inc.
$154.09
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 27.3% below fair value
You pay
$154.09
Bear
$162.81
Fair
$212.06
Bull
$261.32
Bear
$162.81
+5.7%
$13.82 × 14x + net cash
Fair
$212.06
+37.6%
$13.82 × 18x + net cash
Bull
$261.32
+69.6%
$13.82 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($13.82)
Implied Market Multiple
11.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $163.86 from 52 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $212.06 per share.
Warnings
Wall Street's average price target is $163.86 (from 52 analysts). Our estimate is 45% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing