D.R. Horton faces risks from cyclical housing and economic conditions, including fluctuating demand, financing availability, interest rates, inflation, and supply chain disruptions. Potential customer cancellations, pricing limitations, mortgage loan defaults, and access to capital are also significant concerns. Inventory risks, including land and lot values, and potential impairment charges, are substantial. Construction defect claims, legal proceedings, and cybersecurity threats pose further financial risks. Changes in government regulations, particularly regarding climate change, could increase compliance costs. Debt obligations and covenants, including change of control provisions, add to the financial risk profile.
Financial Upside
D.R. Horton's large scale provides economies of scale, potentially lowering costs and increasing access to capital. Strong geographic diversification mitigates regional economic risks. The company's strategy includes managing inventory, offering various home types, and controlling construction costs. Forestar, a majority-owned lot development company, enhances land control and lot supply. Financial services, including mortgage origination and title services, are closely aligned with homebuilding operations. Rental operations offer a potential revenue stream. The company has repurchase authorizations for both debt and stock, potentially increasing shareholder
