Investment Thesis
D.R. Horton maintains strong financial fortitude with minimal leverage and positive free cash flow, but faces material operational deterioration with revenue declining 6.9% YoY and diluted EPS down 19.3%. The critically low gross margin of 1.1% indicates either severe cost pressures or potential data quality issues requiring verification.
Strengths
- Fortress balance sheet with Debt/Equity ratio of 0.00x and $23.6B stockholders equity providing financial stability
- Consistent free cash flow generation of $376.9M supporting strategic flexibility and shareholder returns
- Operating margin of 11.5% demonstrates disciplined cost management despite revenue headwinds
- Conservative capital expenditure at $64.6M indicates asset-light model with strong cash generation
Risks
- Revenue contraction of 6.9% YoY with EPS decline of 19.3% suggests fundamental demand weakness in housing market
- Gross margin of 1.1% is abnormally depressed and signals either structural cost escalation or unit volume deterioration
- Return on Equity of 5.3% and Return on Assets of 3.5% indicate capital inefficiency relative to substantial equity base
- FCF margin of 2.6% versus net margin of 8.6% reveals elevated working capital requirements and execution headwinds
Key Metrics to Watch
- Housing starts, backlog, and average selling prices to assess demand recovery
- Gross margin stabilization and cost structure normalization in subsequent quarters
- Free cash flow sustainability and working capital management efficiency
- Return on equity trajectory and capital allocation decisions
Financial Metrics
Revenue
14.4B
Net Income
1.2B
EPS (Diluted)
$4.27
Free Cash Flow
376.9M
Total Assets
35.6B
Cash
1.9B
Profitability Ratios
Gross Margin
1.1%
Operating Margin
11.5%
Net Margin
8.6%
ROE
5.3%
ROA
3.5%
FCF Margin
2.6%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.00x
Debt/Assets
32.0%
Interest Coverage
N/A
Long-term Debt
N/A
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T13:17:03.840699 |
Data as of: 2026-03-31 |
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