D.R. Horton, Inc. (DHI): A Bull Case Theory

We came across a bullish thesis on D.R. Horton, Inc.  on Value investing subreddit by Euphoric-Marsupial27. In this article, we will summarize the bulls’ thesis on DHI. D.R. Horton, Inc. 's share was trading at $181.80 as of September 5th. DHI’s trailing and forward P/E were 14.61 and 14.43 respectively according to Yahoo Finance.

D.R. Horton (DHI), the largest U.S. homebuilder, is positioned as one of the most compelling opportunities in the housing sector today. The company trades at just 9–10x forward earnings versus the S&P 500’s ~20x, with a PEG ratio under 1.0 suggesting growth is significantly undervalued. In fiscal 2024, DHI delivered EPS above $14 on revenue exceeding $35 billion, while consistently generating ROE above 20%. Its balance sheet is particularly strong, with net debt/EBITDA below 1x, a rare position of conservatism for a cyclical company.

Despite these fundamentals, the stock trades at a discount due to elevated mortgage rates that depressed affordability through 2023–24. This headwind, however, is set to ease as inflation trends lower and the Federal Reserve is expected to cut rates in 2025. A shift in mortgage rates from ~7.5% to the 5–6% range could release pent-up demand from millions of sidelined buyers. Structurally, the U.S. housing market remains undersupplied by an estimated 3–5 million homes, with the greatest shortage in the entry-level segment.

DHI dominates this space with an average selling price of ~$385K, positioning it to capture outsized demand recovery as rates fall. Looking forward, double-digit earnings and sales growth appear achievable, and even a modest re-rating to a 12–14x multiple on projected $15 EPS would imply a stock value between $180–210, compared with ~$140 today. This combination of discounted valuation, structural demand tailwinds, and rate-driven catalysts provides a highly attractive risk/reward profile for investors.

Previously we covered a bullish thesis on D.R. Horton, Inc. (DHI) by Let it Compound in May 2025, which highlighted the company’s scale, decentralized model, prudent capital approach, and strong insider ownership supporting dividends and buybacks. The company’s stock price has appreciated approximately by 44.5% since our coverage. This is because the thesis played out with resilient fundamentals. Euphoric-Marsupial27 shares a similar view but emphasizes valuation and rate-driven demand recovery.

D.R. Horton, Inc.  is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 67 hedge fund portfolios held DHI at the end of the first quarter which was 60 in the previous quarter. While we acknowledge the potential of DHI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.