This week is officially Turkey Stock Week. Each day we will review some of the basic fundamentals and technicals for a company that is setting up as a short opportunity. Today’s stock in focus is DR Horton (DHI).
D.R. Horton, Inc. constructs and sells single-family homes designed primarily for the entry-level and move-up markets. The Company operates in the Midwest, Mid-Atlantic, Southeast, Southwest, and Western regions of the United States. D.R. Horton also, through its financial services operations, provide mortgage financing and title agency services to homebuyers.
Some of the direction for these stocks is predicated on interest rates. If we continue to see rates rise, there could be trouble for some of the weakest in the sector.
Clearly homebuilders have been moving nicely on an upward trajectory as the housing market has been recovering with the help of ultra-low interest rates. One of the more interesting trends for this company is the outlook for EPS. Note that the growth has begun to slow and the forward estimates are showing a sharp slowdown.
In terms of the technical levels, there is weakness in the most recent trend for the stock. Not that price on the weekly chart remains in a consolidation zone with the general trend being down.
The daily chart also shows a consolidation pattern that will need to be resolved.