DCF Studio

    DHI · NYQ · Consumer Cyclical

    D.R. Horton, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 184.16

    Market price

    USD 152.93

    Implied upside

    +20.4%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-09-30

    AdjustedReported capital expenditure averages just 0.43% of revenue, which is too low to be the company's real investment - property trusts and similar structures invest through lines that are not reported as capex. Capex has been set to 1.00% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.
    AdjustedCapital expenditure runs at 1.0% of revenue against depreciation of 0.3%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 184.16+20.4%
    Exit multiple
    USD 187.46+22.6%
    Market price
    USD 152.93

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn5bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 31.8bnUSD 33.6bnUSD 35.4bnUSD 37.2bnUSD 38.8bnUSD 40.4bnUSD 41.9bnUSD 43.3bnUSD 44.6bnUSD 45.7bn+4.1%
    EBITUSD 5.5bnUSD 5.8bnUSD 6.1bnUSD 6.4bnUSD 6.7bnUSD 7.0bnUSD 7.2bnUSD 7.5bnUSD 7.7bnUSD 7.9bn+4.1%
    NOPATUSD 4.3bnUSD 4.6bnUSD 4.8bnUSD 5.1bnUSD 5.3bnUSD 5.5bnUSD 5.7bnUSD 5.9bnUSD 6.1bnUSD 6.2bn+4.1%
    Add depreciation & amortisationUSD 82.3mUSD 87.0mUSD 91.6mUSD 96.1mUSD 100.4mUSD 104.5mUSD 108.4mUSD 112.0mUSD 115.2mUSD 118.1m+4.1%
    Less capital expenditureUSD -318.3mUSD -387.3mUSD -461.4mUSD -540.2mUSD -623.2mUSD -709.9mUSD -799.5mUSD -891.3mUSD -984.5mUSD -1.1bn+14.5%
    Capex, % of revenue1.0%1.2%1.3%1.5%1.6%1.8%1.9%2.1%2.2%2.4%-
    Less increase in working capitalUSD 889.2mUSD -667.6mUSD -656.2mUSD -638.8mUSD -615.4mUSD -585.9mUSD -550.4mUSD -509.0mUSD -462.0mUSD -409.8m-
    Free cashflow to firmUSD 5.0bnUSD 3.6bnUSD 3.8bnUSD 4.0bnUSD 4.1bnUSD 4.3bnUSD 4.5bnUSD 4.6bnUSD 4.7bnUSD 4.8bn-0.3%
    Discount factor0.95530.87190.79570.72620.66280.60490.55210.50380.45980.4197-
    Present valueUSD 4.8bnUSD 3.1bnUSD 3.0bnUSD 2.9bnUSD 2.7bnUSD 2.6bnUSD 2.5bnUSD 2.3bnUSD 2.2bnUSD 2.0bn-
    Present Value Of The ForecastUSD 28.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta1.247Reported 1.369, pulled toward 1.0 (Blume)
    Cost of equity10.17%Risk-free + beta x equity risk premium
    Cost of debt6.89%Assumed: risk-free + 200bp (interest expense not reported)
    Market capitalisationUSD 41.5bn87.3% of capital
    Total debtUSD 6.0bn12.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC9.57%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 184.16

    53% of EV

    Forecast FCFF, final year
    USD 4.8bn
    Capex at depreciation, working capital in reinvestment
    USD 6.2bn
    Less reinvestment at g/ROIC (15.5% of NOPAT)
    USD -960.1m
    Capitalised
    USD 5.3bn
    ROIC (reported)
    16.2%
    Terminal value, undiscounted
    USD 76.2bn
    Terminal value, discounted
    USD 32.0bn
    Enterprise value
    USD 60.1bn
    Less net debt
    USD 3.0bn
    Equity value
    USD 57.1bn

    Exit at 9.8x EBITDA

    Value per shareUSD 187.46

    54% of EV

    Terminal value, undiscounted
    USD 78.6bn
    Terminal value, discounted
    USD 33.0bn
    Enterprise value
    USD 61.1bn
    Less net debt
    USD 3.0bn
    Equity value
    USD 58.1bn

    Spread between methods: 2%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.57%244.29251.34260.07271.03285.02
    8.57%207.59211.29215.81221.39228.34
    9.57%180.11181.91184.16186.93190.38
    10.57%158.79159.48160.41161.62163.17
    11.57%141.78141.80141.95142.25142.73

    Outlined: this model. Green text: above today's price of 152.93. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year0.8%2.9%0.2%
    EBIT margin22.6%17.2%14.6%
    Discount rate-9.6%10.9%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.