Is D.R. Horton, Inc. overvalued or undervalued?

As of 22 July 2025, the valuation grade for D.R. Horton, Inc. has moved from expensive to very expensive, indicating a significant concern regarding its valuation. The company appears to be overvalued based on its current metrics, particularly with a P/E ratio of 9 compared to a peer average of approximately 15, and an EV to EBITDA ratio of 8.17, which also exceeds the industry average. Additionally, the Price to Book Value stands at 1.73, suggesting that the stock may not be justified at its current price level.
In comparison to its peers, D.R. Horton, Inc. is lagging with a lower valuation profile, as evidenced by the peer average P/E of 15.00 and EV to EBITDA of 12.90. Furthermore, while the company has shown strong returns over the long term, with a 3-year return of 138.48% compared to the S&P 500's 70.41%, it has underperformed in the past year with a return of -12.66% versus the S&P 500's 17.14%. This combination of high valuation ratios and recent performance trends reinforces the conclusion that D.R. Horton, Inc. is overvalued.