DHI deep dive! · Invest & Retire Community

DHI deep dive!

I prepared the DHI stock review without using any AI. I dont own DHI and only now own 1 share of DHI thanks to Michael&Eric's team. I did it purely for my education knowledge and training myself how to review a stock. Do you use similar structure? If not you can adopt it for other interested stock.

@Monica Bernard

My review of DHI

Does DHI has a strong economic MOAT ?

none due to many competitors in the same industry and high economic uncertainty can hinder stock performance.

Do I Understand their DHI business?

Is a homebuilding company in US. Their business is cyclical. The Company’s segments include Homebuilding, Rental, Forestar, Finance mortgage finance service. The Homebuilding divisions are primarily engaged in the acquisition and development of land and the construction and sale of residential homes. The Company’s rental segment consists of single-family and multifamily rental operations. The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes. The Forestar segment is a residential lot development company with operations in 59 markets across 24 states. The Financial services segment provides mortgage financing and title agency services to homebuyers in many of the Company’s homebuilding markets. It also conducts insurance-related operations.

Competitors: many! includes Toll brothers, Lennar, Tipranks.co

Company History and Leadership:

Current CEO is Paul Romanowski (with 1.67 years of experience in his position) and most of the board of directors also new. (2-4yrs at most) . There were lots of insiders selling the stock last year and in 2023. Institution owns majority of the shares 84% with insider owning only 1.79%. There has not been meaningfully diluted in the past year. Total employee count of 14K,

How are DHI fundamentals?

· Market cap: 36.3B – rank largest among their peers

· Revenue: 35.3B with Revenue Growth rate projected to do 4.4%

· Beta : 1.37

· EPS :$13.21 with EPS growth rate 8.42%, but recent eps drops of 10.05% compared to previous yr.

· P/E ratio: 8.8 forward PE 10.38 and trailing PE 8.95 reasonable PE compares to peers in same sec

· Dividend yield : 1.3% (gets $1.60/yr) with a low payout 10.4%

· Operating margin: 16.1% -slightly lower than most other builders

· Free Cash flow 2.728M – positive slow growth trend

· Technicals : Sitting near bottom of BB, RSI 40, starting Ascending channel, ranked 17/23 for stock performance, recent 11 bearish events and; Resistance level $127, Support level 114 and Long position 109

What are their Negatives?

1. Stock down from their all time high 199.95 (61% drops)

2. Huge economic uncertainty (trump tariff, fear of recession, people not buying homes, high student debts, caused volatility in the stock

3. Increased supply cost due to tariff policy

4. Increased labour cost -shortage of experienced and quality construction workers.

5. High interest hinders stock performance – less revenue.

6. No economic moat.

7. GDP growth decreases 1.2% in 2025 and 0.8% in 2026 – business can turn around again in 2026 with lower interest rate

What are their Positives?

1. Technically already drops 61%from high – can make it a fair entry

2. Price target from most analyst is 140 (with 13.9% upside) with high estimate of 180

3. Morningstar rating of 3 stars

4. Cyclical which means last quarter performance in winter months are generally poorer sells of homes and real-estate activity. Company has strong pricing power due to the smaller land deals

5. Macro level –mortgage average interest fixed rate is projected to decline to 5.5 and 5% in 2026 to 2027 – this can stimulate demand for new homes.

6. Very Strong balance sheet

7. Quite a few insiders buying in recent VICK’s Insider trading report.

Will you hold, sell or buy this stock DHI ?

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