D.R. Horton Earnings: Strong Results Continue Despite Elevated Mortgage Rates
D.R. Horton's stock surged on July 18 after the no-moat homebuilder released its fiscal third-quarter financial results. With the average 30-year fixed mortgage rate around 7%, affordability remains challenging for many prospective homebuyers. Nevertheless, Horton continues to benefit from its relatively affordable price point compared with other builders and its ability to offer customers attractive sales incentives, such as mortgage rate buydowns. We've raised our fair value estimate by roughly 4% to $146 per share due to our more optimistic gross margin outlook and the time value of money since our last update.