Here's What To Make Of D.R. Horton's (NYSE:DHI) Decelerating Rates Of Return

Yahoo

11-06-2025

To find a multi-bagger stock, what are the underlying trends we should look for in a business? Typically, we'll want to notice a trend of growing return on capital employed (ROCE) and alongside that, an expanding base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. With that in mind, the ROCE of D.R. Horton (NYSE:DHI) looks decent, right now, so lets see what the trend of returns can tell us.
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For those who don't know, ROCE is a measure of a company's yearly pre-tax profit (its return), relative to the capital employed in the business. To calculate this metric for D.R. Horton, this is the formula:
Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)
0.18 = US$5.5b ÷ (US$36b - US$5.0b) (Based on the trailing twelve months to March 2025).
Thus, D.R. Horton has an ROCE of 18%. On its own, that's a standard return, however it's much better than the 14% generated by the Consumer Durables industry.
See our latest analysis for D.R. Horton
Above you can see how the current ROCE for D.R. Horton compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for D.R. Horton .
While the current returns on capital are decent, they haven't changed much. The company has consistently earned 18% for the last five years, and the capital employed within the business has risen 118% in that time. Since 18% is a moderate ROCE though, it's good to see a business can continue to reinvest at these decent rates of return. Stable returns in this ballpark can be unexciting, but if they can be maintained over the long run, they often provide nice rewards to shareholders.
In the end, D.R. Horton has proven its ability to adequately reinvest capital at good rates of return. And long term investors would be thrilled with the 130% return they've received over the last five years. So while investors seem to be recognizing these promising trends, we still believe the stock deserves further research.
If you're still interested in D.R. Horton it's worth checking out our to see if it's trading at an attractive price in other respects.
While D.R. Horton isn't earning the highest return, check out this free list of companies that are earning high returns on equity with solid balance sheets.
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