Valuation shifts for Lowe’s and D.R. Horton

Recent share price weakness in Lowe’s Companies (LOW) and D.R. Horton (DHI) has prompted renewed scrutiny of both stocks’ valuations. The moves come against a backdrop of wider market declines and sector-specific pressures.

D.R. Horton’s stock is up about 3.5% over the past day but remains down 14.45% over the past month and 5.83% year to date. Lowe’s shares have fallen 10.7% over the past month and 2% over the past three months, while another source cites an 8.3% decline over the past month versus a 7.6% drop in the Zacks S&P 500 (SPX) composite.

Despite these pullbacks, both companies retain longer-term gains. D.R. Horton shows a 1‑year total shareholder return of 8.97% and 3‑year return of 45.10%, while Lowe’s has delivered a 5‑year total shareholder return of 33.53%.

The most followed valuation narrative for D.R. Horton estimates fair value at about $160.50 per share, versus a recent close of $137.22. That implies the stock is roughly 14.5% undervalued based on modeled assumptions.

Analysts’ consensus price target stands at $162.6, with a wide range from a bullish $199.0 to a bearish $110.0. The narrative attributes the perceived fair value gap to expectations around revenue pacing, margin resilience and future earnings power.

However, not all metrics support a clear discount. On a price-to-earnings ratio of 11.9x, D.R. Horton trades slightly above both its Consumer Durables peer group at 11.3x and the broader industry average at 11.5x, while the narrative’s implied “fair” multiple is much higher at 23.7x.

The valuation case also flags risks, including the need for housing affordability to hold up, the impact of higher buyer incentives, and potential antitrust or regulatory actions that could challenge the current thesis.

Lowe’s shares trade at about US$236.28, which one valuation narrative characterizes as roughly a 5% intrinsic discount and about 21% below the average analyst price target. That narrative sets fair value at approximately $286.18, implying Lowe’s is 17.4% undervalued.

The key driver in this view is Lowe’s expansion in the professional contractor segment. The acquisition of Foundation Building Materials is cited as sharply accelerating access to the large Pro market, especially in California, the Northeast and the Midwest, and supporting expectations of above‑market sales growth and greater revenue diversification.

Risks to that thesis include the possibility that acquisitions such as Foundation Building Materials underdeliver on integration and that labor or digital competition pressures margins more than anticipated.

Lowe’s has also become a heavily searched stock on Zacks.com. For the current quarter, it is expected to post earnings of $2.96 per share, a 1.4% increase from the prior‑year quarter. The Zacks Consensus Estimate for the quarter has slipped 1% over the last 30 days.

For the current fiscal year, consensus earnings of $12.69 imply 3.3% growth from the prior year, with estimates unchanged over the past month. For the next fiscal year, consensus earnings of $13.8 suggest 8.7% growth, though that estimate has edged down 0.2% in 30 days.

Taking recent estimate revisions and other earnings-related factors into account, Zacks assigns Lowe’s a Rank #4 (Sell), indicating a cautious near‑term view even as some valuation narratives argue the stock is undervalued.