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Vitalii Liubimov's Avatar
published in Blogs
May 31, 2019

DR Horton forming a base after post-earnings decline

Homebuilder DR Horton (NYSE: DHI) reported earnings on April 25. The company beat its EPS estimate as well as its revenue estimate, but the stock fell 4.76% that day as the company’s outlook disappointed investors. Now that the disappointment is starting to subside, the stock appears to be forming a base in the $44 area and looks as though it may be ready for another leg higher.

Looking at the daily chart we see that the stock has been trending higher since the end of December and there is a trend line that connects the lows from December, January, and March. The stock is still well above the trend line, but the stochastic readings have dipped down and are just above oversold territory and have now made a bullish crossover.

The Tickeron AI Trend Prediction tool generated a bullish signal on DR Horton on May 1 and the signal showed a confidence level of 66%. The signal calls for a gain of 2.5% in the next week and 75% of previous predictions on the stock have been successful.

The fundamentals for DR Horton are pretty strong. The company has seen earnings grow by an average of 27% per year over the last three years. During that same span, sales have grown by a rate of 14% per year.

The company has a return on equity of 18.8% and a profit margin of 12.8%.

One other factor that should benefit DR Horton is the fact that the Fed has stopped raising interest rates, at least for the time being. The housing industry is very interest rate sensitive so the slowdown in the hiking cycle should help the entire industry, including DR Horton.

Related Ticker: DHI

Momentum Indicator for DHI turns negative, indicating new downward trend

DHI saw its Momentum Indicator move below the 0 level on May 06, 2025. This is an indication that the stock could be shifting in to a new downward move. Traders may want to consider selling the stock or exploring put options. Tickeron's A.I.dvisor looked at 89 similar instances where the indicator turned negative. In of the 89 cases, the stock moved further down in the following days. The odds of a decline are at .

Price Prediction Chart

Technical Analysis (Indicators)

Bearish Trend Analysis

DHI moved below its 50-day moving average on May 05, 2025 date and that indicates a change from an upward trend to a downward trend.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where DHI declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for DHI entered a downward trend on April 21, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Bullish Trend Analysis

The RSI Indicator points to a transition from a downward trend to an upward trend -- in cases where DHI's RSI Oscillator exited the oversold zone, of 22 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

The Stochastic Oscillator is in the oversold zone. Keep an eye out for a move up in the foreseeable future.

The Moving Average Convergence Divergence (MACD) for DHI just turned positive on April 22, 2025. Looking at past instances where DHI's MACD turned positive, the stock continued to rise in of 52 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where DHI advanced for three days, in of 317 cases, the price rose further within the following month. The odds of a continued upward trend are .

DHI may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 59, placing this stock slightly better than average.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (2.320) is normal, around the industry mean (7.196). P/E Ratio (11.663) is within average values for comparable stocks, (103.177). Projected Growth (PEG Ratio) (0.639) is also within normal values, averaging (1.437). DHI has a moderately low Dividend Yield (0.007) as compared to the industry average of (0.046). P/S Ratio (1.534) is also within normal values, averaging (88.859).

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. DHI’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

Notable companies

The most notable companies in this group are DR Horton (NYSE:DHI), Lennar Corp (NYSE:LEN), Pultegroup (NYSE:PHM), KB Home (NYSE:KBH).

Industry description

Homebuilding includes companies residential home construction companies, renovators and repair firms. The companies may be building single-family or multifamily homes, condominiums or mobile homes. Over the five years to 2019, the Home Builders industry is estimated to have grown at an annualized rate of 2.5% to reach $89.4 billion, (including expected growth of 2.6% in 2019), according to a study by IbisWorld. After having suffered one of its worst crises a decade ago during the last macroeconomic recession–which had much of its origins in U.S. real estate – the homebuilding industry has been recovering steadily so far. Higher disposable incomes and improving economic activity have bolstered consumers’ purchases of homes. While revenue of the Home Builders industry remains well below its prerecession high, demand growth estimates show promise.

Market Cap

The average market capitalization across the Homebuilding Industry is 7.78B. The market cap for tickers in the group ranges from 66.68K to 53.71B. DHI holds the highest valuation in this group at 53.71B. The lowest valued company is ASCK at 66.68K.

High and low price notable news

The average weekly price growth across all stocks in the Homebuilding Industry was -1%. For the same Industry, the average monthly price growth was 6%, and the average quarterly price growth was -16%. BZH experienced the highest price growth at 10%, while GFASY experienced the biggest fall at -48%.

Volume

The average weekly volume growth across all stocks in the Homebuilding Industry was 10%. For the same stocks of the Industry, the average monthly volume growth was -46% and the average quarterly volume growth was 30%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 45
P/E Growth Rating: 56
Price Growth Rating: 63
SMR Rating: 60
Profit Risk Rating: 58
Seasonality Score: -7 (-100 ... +100)
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General Information

a company which engages in construction and sale of single family homes

Industry Homebuilding

Profile
Fundamentals
Details
Industry
Homebuilding
Address
1341 Horton Circle
Phone
+1 817 390-8200
Employees
13450
Web
https://www.drhorton.com
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