D.R. Horton´s potential amid a strong supply-demand imbalance

Abstract

This work project "Equity Research -Valuation of D.R. Horton's (DHI)" evaluates D.R. Horton’s position within the homebuilding industry. With the emergence of the millennial’s participation in the housing market, the shortage of homes in the US market (estimated to be 5.3 million), and the increasing population in-flow to the Sunbelt region, DHI will prosper in the future, as being well positioned to capture these trends. Already proven to be a market share leader, we expect the company’s revenues to grow at an average annual growth rate of 8% until 2030. Nonetheless, the persistency of inflationary pressures, decreasing homeownership rates, and volatile mortgage rates, may pose risks to the prosperity of the industry. Our DCF valuation for DHI yield a price target of 139$for FY22, resulting in a 31% total shareholder return and hence, a BUY recommendation.