DR Horton Inc (DHI)
Profitability ratios
Return on sales
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 26.37% | 31.37% | 28.35% | 24.31% | 22.01% |
| Operating profit margin | 16.81% | 22.20% | 18.89% | 13.91% | 11.51% |
| Pretax margin | 17.67% | 22.68% | 19.23% | 14.65% | 12.08% |
| Net profit margin | 13.38% | 17.50% | 15.03% | 11.69% | 9.20% |
D.R. Horton Inc.'s profitability ratios indicate its evolving profit generation efficiency over the last five years. The gross profit margin, a measure of revenue retained after accounting for the cost of goods sold, declined from 31.37% in 2022 to 26.37% in 2023, possibly due to increased costs. The operating profit margin, reflecting earnings before interest and taxes, also decreased from 22.61% to 17.21% during the same period, suggesting lower operational efficiency.
The pretax margin, a measure of profitability before taxes, showed a similar trend, declining from 22.79% to 17.81%. This drop is indicative of potential challenges impacting profitability. However, the net profit margin, showing how much of each dollar of revenue translates into profit after all expenses, decreased from 17.50% in 2022 to 13.38% in 2023, indicating a decrease in bottom-line profitability.
Overall, D.R. Horton Inc.'s declining profitability ratios over the past year could be a cause for concern and warrant further investigation into the factors contributing to the decrease in margins.
Return on investment
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 18.30% | 24.49% | 21.85% | 14.94% | 12.97% |
| Return on assets (ROA) | 14.57% | 19.30% | 17.39% | 12.55% | 10.37% |
| Return on total capital | 24.98% | 34.93% | 31.96% | 22.94% | 19.33% |
| Return on equity (ROE) | 20.91% | 30.20% | 28.05% | 20.05% | 16.15% |
Based on the profitability ratios for D.R. Horton Inc., we observe a consistent and positive trend in the company's performance over the past five years. The operating return on assets (Operating ROA) has exhibited solid growth, reaching 18.73% in September 2023, from 13.07% in September 2019. This indicates the company's ability to generate operating income from its assets has been improving steadily.
Similarly, the return on assets (ROA) has also seen a notable increase, reaching 14.57% in September 2023 compared to 10.37% in September 2019. This signifies efficient asset utilization and increasing profitability from its assets.
The return on total capital has demonstrated substantial growth, reaching 21.96% in September 2023, from 15.20% in September 2019. This suggests that the company has been effectively leveraging its total capital to generate returns for its investors.
Furthermore, the return on equity (ROE) has exhibited a robust upward trajectory, indicating an upward trend in shareholder value creation. The ROE has advanced to 20.91% in September 2023 from 16.15% in September 2019, reflecting the company's enhancement in generating profits from shareholders' equity.
Overall, the trend in profitability ratios demonstrates an improved ability of D.R. Horton Inc. to generate profits relative to its assets, capital, and equity, signifying a positive outlook for the company's financial performance.