D.R. Horton, Inc. (NYSE:DHI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with the analysts modelling a real improvement in business performance.

Following the latest upgrade, the 14 analysts covering D.R. Horton provided consensus estimates of US$32b revenue in 2023, which would reflect a perceptible 5.2% decline on its sales over the past 12 months. Statutory earnings per share are supposed to dive 27% to US$11.15 in the same period. Before this latest update, the analysts had been forecasting revenues of US$28b and earnings per share (EPS) of US$9.15 in 2023. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for D.R. Horton

With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to US$121 per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on D.R. Horton, with the most bullish analyst valuing it at US$148 and the most bearish at US$98.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await D.R. Horton shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the D.R. Horton's past performance and to peers in the same industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 10% by the end of 2023. This indicates a significant reduction from annual growth of 18% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 1.4% per year. It's pretty clear that D.R. Horton's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at D.R. Horton.

These earnings upgrades look like a sterling endorsement, but before diving in - you should know that we've spotted 2 potential risk with D.R. Horton, including recent substantial insider selling. For more information, you can click through to our platform to learn more about this and the 1 other risk we've identified .

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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