DHI stock is the IBD Stock Of The Day as it offers an entry and homebuilder stocks at large rise near buy points due to an improving housing market.
D.R. Horton engages in the construction and sale of single-family housing. It claims to be the largest homebuilder by volume in the United States since 2002.
Earnings are expected to be tough for a few quarters for D.R. Horton and other homebuilders, but investors are looking beyond that.
As the housing market recovers, homebuilder stocks are acting well, with several near buy points, including Meritage Homes, Lennarand PulteGroup.
In late March, the Fed signaled a shift toward pausing rate hikes.
In 2022, the housing market got hammered by higher mortgage rates, which jumped to a two-decade high above 7% from 3% at the start of the year. Mortgage rates have come down significantly.
DHI stock was added to the IBD SwingTrader Tuesday as it bounced from its 21- and 50-day moving averages, breaking a short-term downtrend.
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Top Homebuilder Stock
The Stock Checkup tool shows that DHI stock earns an IBD Composite Rating of 94, RS Rating of 91 and EPS Rating of 91, all out of a best-possible 99.
The 91 Relative Strength Rating means that DHI stock has outperformed 91% of all stocks in IBD's database over the past year.
DHI Stock
Shares of the homebuilder gapped up 3.7% to 99.77 in heavy volume on the stock market today, after just retaking the 50-day moving average Monday.
The move above a downward-sloping trendline and short-term levels already offered buying opportunities earlier in the session.
On Tuesday, D.R. Horton stock also regained a still-valid 99.09 cup-with-handle buy point. It first seized that entry on March 23, then drifted lower to test the 50-day line, the MarketSmith chart shows.
The relative strength line jumped Tuesday with the stock but has flattened out after a sharp rally in the second half of 2022. A rising RS line means that a stock is outperforming the S&P 500.
D.R. Horton Earnings
The Arlington, Texas-based company boasts a strong record of earnings growth. The homebuilder has seen its earnings vault from $2.74 a share in 2017 to $16.51 in 2022, growing at a robust pace despite the Covid-19 pandemic.
On a per-share basis, D.R. Horton earnings rose nearly 45% in fiscal 2022, following a 78% leap the prior year.
But earnings growth has slowed and turned into a decline in the latest quarter, ended in December.
The Street sees D.R. Horton earnings plunging 45% in 2023 as sales fall 15%.
Analysts call for a 4% rebound in 2024 but earnings per share would still be well below 2022 levels.
Industry peers include KB Home, Meritage Homes, Toll Brothers, Lennar, Pulte and Taylor Morrison Home.
Many of those homebuilder stocks are also nearing buy points.
MTH stock is on the prestigious IBD Leaderboard list, backed by strong earnings and fundamentals.
