D.R. Horton is a large U.S. homebuilder that builds and sells residential homes and related services, operating with substantial reported earnings, strong gross margins and a conservatively levered balance sheet.
The company generates material cash and earnings scale: trailing twelve‑month net income rose to $5.46B (period end 2025-03-31) and trailing operating cash flow has increased from about $618.0M in 2016 to $2.19B (TTM as of 2024-09-30). Profitability metrics show recent strength, with a gross margin of 25.9% and a net profit margin of 12.9% (period ending 2024-09-30), and return on equity at 22.5% in the latest quarter (2025-03-31).
The balance sheet is conservative by common measures: debt‑to‑equity is 0.2947 and the current ratio is 2.81, supporting short‑term liquidity.
Notable areas of concern include earnings quality and quarter‑to‑quarter volatility. Operating cash flow (TTM $2.19B) materially lags reported net income (TTM $5.46B), indicating a sizable cash‑conversion gap that warrants monitoring.
Revenue and net income have shown episodic spikes and pullbacks — quarterly revenue peaked at $19.11B (2024-09-30) while the most recent quarter was $6.89B, and quarterly net income fell from a $2.46B peak to $594.8M in the latest report — underscoring variability in top‑line and headline earnings. In addition, ROE growth has been negative on a trend basis (-3.06%), despite the recent uptick to 22.5%.
Key fundamentals to watch going forward are the relationship between operating cash flow and reported net income (monitor via Earnings Quality Analysis and Strategic Capital Allocation), stability of quarterly revenue and net income trends (Revenue & Net Income), trend in net and gross margins (Profit Margin Trends), and continued movement in return on equity and its growth trajectory (Return on Equity (ROE)). Also track per‑share earnings and revenue trends (EPS Diluted & Revenue per Share, Revenue & EPS Growth) and valuation context as measured by PE trends (Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
HORTON D R INC /DE/ shows episodic volatility in both revenue and net income across the reported quarters, with several large spikes punctuating otherwise smaller quarterly figures.
The most prominent inflection point is the quarter ended 2024-09-30, when revenue reached $19.11B and net income rose to $2.46B. Earlier elevated quarters include 2024-06-30 (revenue $9.97B, net income $1.35B) and 2023-12-31 (revenue $7.73B, net income $947.4M). Outside those peak quarters, revenues and net income have generally appeared at lower levels in other periods shown.
Focusing on the most recent year, revenue and net income have moved lower from the 2024 peaks into 2025, with net income declining from $844.9M (2024-12-31) and $810.4M (2025-03-31) to $594.8M in the latest reported quarter.
Revenue in the most recent quarter is $6.89B, below the multi-billion-dollar peaks seen in mid-2024. The most recent quarterly net income was $594.8M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Oct 2023 to Sep 2024, Horton D R Inc De converts approximately 26¢ of every revenue dollar into gross profit (gross margin: 25.9%).After accounting for operating expenses and taxes and expenses, the company retains 12.9% as net profit margin, resulting in $4.76B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Oct 2023 to Sep 2024
Analyzing long-term margin stability and competitive positioning
HORTON D R INC /DE/ shows gross margins in the most recent period at 25.9% (2024-09-30) and a net profit margin of 12.9% for the same trailing period, both higher than many of the single-digit net margins recorded across the 2013–2018 range. Gross margin has varied over time — rising into the low 30s in 2022 (31.4% in 2022-09-30 and 30.6% in 2022-12-31), dipping to 12.0% in 2021-03-31, and generally sitting around the 20–26% band in recent comparable quarters. The net margin in the latest quarter represents an improvement versus the mid-single-digit net margins seen in several prior years.
Understanding Profit Margins
Between Oct 2023 and Sep 2024, Horton D R Inc De converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
HORTON D R INC /DE/’s trailing twelve‑month net income has risen in the most recent data, increasing from $4.76B at 2024-09-30 to $5.46B at 2025-03-31, marking a recent uptick in reported earnings. Net income shows a multi‑year upward trend from the low billions in the mid‑2010s (roughly $1.0–$1.3B) through roughly $4.2B in 2021 and $4.76B in late 2024 into the latest $5.46B, with the most notable inflection occurring between 2024-09-30 and 2025-03-31.
Operating cash flow (TTM) lags reported earnings in the available series: operating cash flow was $2.19B as of 2024-09-30, up from prior figures such as $892.1M at 2019-09-30 and $618.0M in 2016-09-30, but remains materially below the most recent net income figure. The most recent Net Income (TTM) is $5.46B (period end 2025-03-31); the most recent Operating Cash Flow (TTM) is $2.19B (period end 2024-09-30).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
HORTON D R INC /DE/’s return on equity has risen in the most recent reported quarters, moving from 18.4% on 2024-09-30 to 22.5% on 2025-03-31. The latest readings sit above the mid‑teens levels that characterized several earlier periods and show a recent upward trend.
Looking further back, ROE has fluctuated, with a prior peak of 27.4% on 2021-09-30 and a pronounced negative outlier of -734.7% on 2019-12-31; several other periods from 2016–2018 recorded ROE around 13–16%. The most recent quarterly ROE was 22.5% (period end 2025-03-31).
Recent ROE Trend: Upward trajectory from 18.4% to 22.5%.
Historical ROE Peak: 27.4% in 2021.
Outlier: -734.7% in 2019.
Historical Range (2016–2018): 13%–16%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
HORTON D R INC /DE/ displays a clear increase in operating cash generation over the available history, with TTM operating cash flow rising from roughly $618.0M (2016-09-30) and $892.1M (2019-09-30) to $2.19B in the most recent operating observation (2024-09-30).
Investing cash flow has been persistently negative, reflecting ongoing reinvestment; it was most negative around 2022 at -$414.9M and has been moderating in recent periods to -$190.6M (2024-09-30) and -$168.7M in the latest investing observation (2025-09-30).
Financing cash flow observations in the dataset are all negative, with the latest available financing TTM recorded at -$490.1M (2019-09-30).
The most recent trailing-twelve-month values are:
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.