RBC Capital Adjusts Price Target#
RBC Capital has raised its price target for D.R. Horton stock (NYSE:DHI) from $117.00 to $123.00, while keeping an Underperform rating. Currently, the stock is trading at $162.20, which is significantly higher than the new target. The company's price-to-earnings (P/E) ratio stands at 14.7, a measure used to evaluate if a stock is over or under-valued based on its earnings.
Earnings Performance#
Following D.R. Horton’s second-quarter earnings report, RBC Capital adjusted its earnings per share estimates for fiscal years 2026 and 2027. The estimates were increased by 4% for 2026 but decreased by 1% for 2027. The company reported an adjusted diluted earnings per share of $2.33, surpassing both RBC's and the consensus estimate of $2.13. Total revenue for the quarter reached $7.56 billion, slightly above expectations, and orders increased by 11% year-over-year, outperforming Evercore ISI’s estimate of a 3% rise.
Analyst Outlook#
Despite the positive earnings report, RBC Capital expressed concerns about potential challenges ahead. The firm noted that while D.R. Horton has shown resilience, broader market data indicates a slowdown that could impact the company in the coming quarters. Additionally, five analysts have recently lowered their earnings forecasts for D.R. Horton, reflecting a cautious outlook.
Valuation Concerns#
RBC Capital highlighted risks related to volume and margin weaknesses as the year progresses. The company’s current valuation is approximately 2.0 times its tangible book value, with a Price/Book ratio of 1.85. This suggests that the stock is trading close to its fair value, according to InvestingPro analysis. Other firms, such as Evercore ISI and BofA Securities, have also raised their price targets for D.R. Horton, indicating a generally positive outlook on its financial performance.