Are DR Horton Inc (DHI) shares trading below fair value?
DR Horton Inc (DHI) receives a strong review ranking of 73 from InvestorsObserver data analysis. The proprietary ranking system focuses on the underlying health of a company through analysis of its stock price, earnings and growth rate. DHI is better valued than 73% of stocks based on these valuation analyses. Investors who primarily focus on buy and hold strategies will find the valuation ranking relevant to their goals when making investment decisions.
DHI has a year-over-year price-to-earnings (PE) ratio of 4.8. The historical average of around 15 indicates good value for DHI stock as investors pay lower prices relative to company earnings. DHI’s low trailing PE ratio shows that the company has been trading below fair market value recently. Its trailing 12-month earnings per share (EPS) of 15.55 more than justifies the current share price. However, rolling PE ratios do not take into account the company’s projected growth rate, resulting in many new companies having high PE ratios due to high growth potential that attracts investors despite insufficient earnings. . DHI has a 12-month PE-to-Growth (PEG) ratio of 0.67. Markets are overvaluing DHI relative to its expected growth, as its PEG ratio is currently above the fair market value of 1. The PEG of 15.55 stems from its forward price-to-earnings ratio being divided by its growth rate . PEG ratios are one of the most widely used valuation metrics due to the incorporation of more fundamental business metrics and the focus on the future of the business rather than about his past.
DHI’ has a strong valuation at its current price due to an undervalued PEG ratio due to strong growth. DHI’s PE and PEG are better than the market average, which translates into an above-average valuation score. Click here for the full DR Horton Inc (DHI) stock report.
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