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D.R. Horton, Inc. (DHI) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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D.R. Horton, Inc. (DHI)

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Intrinsic Value (DCF)

Current$161.00
→
Intrinsic$300.35
+87%
$201.53$300.35$487.97
Market implies 5% growth for 5 years
DCF analysis suggests DHI could have 87% upside at 20% growth — verify assumptions match your view.
At $161, the market prices in only 5% growth — below historical 20%, suggesting low expectations.
Range: Bear $202 → Bull $488. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →16%18%20%22%
8%$368$400$433$469
10%$256$277$300$325
12%$194$210$227$245
14%$154$167$180$195

Bull Case

  • Bull case ($488) offers 203% upside at 24% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (5%) ≤ historical CAGR (20%)

Bear Case

  • Bear case ($202) with 16% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$3.94B
Year 2$4.73B
Year 3$5.67B
Year 4$6.81B
Year 5$8.17B
Terminal$120.22B

📐 Model Inputs

Growth Rate20.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.28BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is DHI stock undervalued or overvalued?
🟢 UNDERVALUED

DHI trades at $161.00 vs. our DCF-derived intrinsic value of $300.35, implying +108% upside. At a 10.0% WACC and 20.0% projected FCF growth, the market appears to be underpricing the present value of DHI's future cash flows. The bear case ($193.62) still suggests upside, providing margin of safety.

What is DHI's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.28B, projected at 20.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $3.05B net debt and dividing by 0.31B shares: Bear $193.62 | Base $300.35 | Bull $457.52. Current price $161.00 implies +108% to base case.

How is DHI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 20.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($96.12B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.