D.R. Horton Stock Lost 14% In A Month. Do You Buy Or Wait?

D.R. Horton (DHI) stock is down 14.0% in 21 trading days. The stock looks fairly priced at the moment, though history suggests you may benefit from buying dips. Consider the following data:

• Size: D.R. Horton is a $46 Bil company with $35 Bil in revenue currently trading at $151.39.
• Fundamentals: Last 12 month revenue growth of -7.3% and operating margin of 14.2%.
• Liquidity: Has Debt to Equity ratio of 0.16 and Cash to Assets ratio of 0.07
• Valuation: D.R. Horton stock is currently trading at P/E multiple of 11.6 and P/EBIT multiple of 9.4
• Has one instance since 2010 where it dipped >30% in < 30 days and subsequently returned 108% within a year. See DHI Dip Buy Analysis.

While we like to buy dips if the fundamentals check out – for DHI, see Buy or Sell DHI Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and DHI drops another 20-30% to $106 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience. Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

DHI stock has fallen meaningfully recently and we currently find it fairly priced. This may feel like a caution, and there is significant risk in relying on a single stock. However, there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Separately, consider what could long-term performance for your portfolio be if you combined 10% commodities, 10% gold, and 2% crypto with equities.

Below are the details, but before that, as a quick background: DHI operates as a homebuilder offering single-family and attached homes, along with mortgage financing, title insurance, examination, and closing services across multiple U.S. regions.

2022 Inflation Shock

• DHI stock fell 44.8% from a high of $109.65 on 10 December 2021 to $60.56 on 17 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 28 April 2023
• Since then, the stock increased to a high of $197.06 on 19 September 2024 , and currently trades at $151.39

 
2020 Covid Pandemic

• DHI stock fell 53.6% from a high of $62.05 on 20 February 2020 to $28.78 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 16 July 2020

 
2018 Correction

• DHI stock fell 37.7% from a high of $52.87 on 8 January 2018 to $32.96 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 8 October 2019

 
2008 Global Financial Crisis

• DHI stock fell 85.9% from a high of $30.86 on 2 February 2007 to $4.34 on 21 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 17 August 2015

 
Worried that DHI could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.