Dream Finders Homes, Inc. (NYSE: DFH)

Sector: Consumer Cyclical Industry: Residential Construction CIK: 0001825088
Market Cap 2.07 Bn
P/B 1.51
P/E 7.16
P/S 0.44
ROIC (Qtr) 9.20
Div Yield % 0.00
Rev 1y % (Qtr) -3.64
Total Debt (Qtr) 1.77 Bn
Debt/Equity (Qtr) 1.29
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About

Investment thesis

Bull case

  • Operating cash flow of 62.27M provides exceptional 45.66x coverage of minority interest expenses 1.36M, showing strong core operations.
  • Robust free cash flow of 40.31M exceeds capital expenditure of 21.96M by 1.84x, indicating strong organic growth funding capability.
  • Cash position of 290.18M provides exceptional 212.74x coverage of minority interest expenses 1.36M, indicating strong liquidity.
  • Retained earnings of 1.12B provide strong 2.98x coverage of intangibles 375.14M, indicating quality earnings retention.
  • Retained earnings of 1.12B represent substantial 0.81x of equity 1.37B, indicating strong internal capital generation.

Bear case

  • Operating cash flow of 62.27M barely covers its investment activities of (226.05M), with a coverage ratio of -0.28, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 290.18M against inventory of 2.15B, the 0.14 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Cash reserves of 290.18M provide limited coverage of acquisition spending of (204.95M), which is -1.42x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • The company's operating cash flow of 62.27M shows concerning coverage of stock compensation expenses of 25.15M, with a 2.48 ratio indicating potential earnings quality issues.
  • Operating cash flow of 62.27M provides minimal 0.73x coverage of tax expenses of 85.48M, suggesting potential tax planning inefficiencies or unsustainable tax positions.

Segments Breakdown of Revenue (2024)

Product and Service Breakdown of Revenue (2024)

Peer comparison

Companies in the Residential Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DHI Horton D R Inc /De/ 56.51 Bn 105.92 7.04 5.55 Bn
2 TOL Toll Brothers, Inc. 29.11 Bn 76.92 7.08 2.79 Bn
3 PHM Pultegroup Inc/Mi/ 28.02 Bn 12.63 1.62 2.16 Bn
4 LEN Lennar Corp /New/ 23.56 Bn -229.13 7.79 4.08 Bn
5 NVR Nvr Inc 21.52 Bn 16.06 2.13 1.05 Bn
6 IBP Installed Building Products, Inc. 8.62 Bn -487.54 19.34 0.99 Bn
7 TMHC Taylor Morrison Home Corp 6.86 Bn 8.06 0.82 2.26 Bn
8 MTH Meritage Homes CORP 5.67 Bn 12.52 0.97 1.83 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.88 1.47
EV to Cash from Ops. EV/CFO 54.48 43.01
EV to Debt EV to Debt 1.92 37.82
EV to EBIT EV/EBIT 9.06 48.76
EV to EBITDA EV/EBITDA 8.79 112.58
EV to Free Cash Flow [EV/FCF] EV/FCF 84.17 11.82
EV to Market Cap EV to Market Cap 1.64 1.26
EV to Revenue EV/Rev 0.73 3.28
Price to Book Value [P/B] P/B 1.51 9.23
Price to Earnings [P/E] P/E 7.16 -14.72
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 8.23
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 6.29
Dividend per Basic Share Div per Share (Qtr) 0.00 0.54
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 96.10
Interest Coverage Int. cover (Qtr) 0.00 142.03
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 0.45 27.50
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 24.62 196.58
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 4.02
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -7.41 -29.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -9.16 -30.05
EBIT Growth (1y) % EBIT 1y % (Qtr) -6.80 -31.27
EBT Growth (1y) % EBT 1y % (Qtr) -6.80 -32.05
EPS Growth (1y) % EPS 1y % (Qtr) -6.98 -25.62
FCF Growth (1y) % FCF 1y % (Qtr) 111.02 341.90
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.42 -14.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.22 1.00
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.13
Cash Ratio Cash Ratio 0.00 0.23
Current Ratio Current Ratio 0.00 0.81
Debt to Equity Ratio Debt/Equity (Qtr) 1.29 0.58
Interest Cover Ratio Int Coverage (Qtr) 0.00 142.03
Times Interest Earned Times Interest Earned (Qtr) 0.00 142.03
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 8.60 10.57
EBIT Margin % EBIT Margin % (Qtr) 8.02 9.64
EBT Margin % EBT Margin % (Qtr) 8.02 9.44
Gross Margin % Gross Margin % (Qtr) 17.90 22.26
Net Profit Margin % Net Margin % (Qtr) 6.20 7.17