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Taylor Morrison (TMHC)
NYSE:TMHC
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Taylor Morrison
(NYSE:TMHC)
73Outperform
Positive Factors
Financial Performance
Higher delivery volume, lower SG&A/sales and a lower tax rate than expected were the primary drivers of the core beat.
Market Position
TMHC remains a top pick in the homebuilding space, with the company more insulated from aggressive competition at the entry-level.
Negative Factors
Price Target
The price target drops slightly from $86 to $83 due to expectations of an at-best flat interest rate environment in 2025.
Taylor Morrison (TMHC) vs. S&P 500 (SPY)
Market Cap
$6.05B
Dividend YieldN/A
Average Volume (3M)1.18M
Price to Earnings (P/E)7.0
Beta (1Y)1.66
Revenue Growth10.11%
EPS Growth19.06%
CountryUS
Employees3,000
SectorConsumer Cyclical
Sector Strength49
IndustryResidential Construction
Share Statistics
EPS (TTM)8.28
Shares Outstanding101,737,680
10 Day Avg. Volume1,258,633
30 Day Avg. Volume1,183,263
Financial Highlights & Ratios
PEG Ratio0.37
Price to Book (P/B)N/A
Price to Sales (P/S)0.74
Price to Cash Flow (P/CF)3.50
P/FCF Ratio3.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$77.38Price Target Upside33.21% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
Taylor Morrison Business Overview & Revenue Model
Company DescriptionTaylor Morrison Home Corp. engages in the business of residential homebuilding and the development of lifestyle communities. It operates through the following segments: East, Central, West, and Financial Services. The East segment includes operations in Atlanta, Charlotte, Chicago, Orlando, Raleigh, Southwest Florida, and Tampa regions. The Central segment consists of Austin, Dallas, Denver, and Houston. The West segment covers Bay Area, Phoenix, Sacramento, and Southern California. The Financial Services segment provides a number of finance-related services through mortgage lending operations. The company was founded on November 15, 2012 and is headquartered in Scottsdale, AZ.
How the Company Makes MoneyTaylor Morrison makes money primarily through the sale of homes, which includes both single-family and multi-family residential properties. The company's revenue model is centered on acquiring land, developing lots, and constructing homes that are then sold to consumers. Revenue is primarily generated from the home sales process, with additional income streams from the financing and insurance services offered to buyers. The company benefits from strategic partnerships with suppliers and contractors to manage costs and maintain quality standards. Additionally, Taylor Morrison may engage in joint ventures or partnerships to expand its market reach and leverage local expertise in different regions. Economic factors such as interest rates, housing demand, and government incentives for homebuyers also significantly impact the company's earnings.
Taylor Morrison Financial Statement Overview
Summary
Taylor Morrison's financial performance is robust, with strong revenue and profit growth. The income statement shows improved margins and strong profitability. The balance sheet is stable with increased equity and reduced debt, although high liabilities remain a concern. Cash flow is positive but could benefit from improved cash conversion efficiency.Income Statement
Taylor Morrison demonstrates robust profitability with a consistent increase in gross and net profit margins. Gross profit margin increased from approximately 17.3% in 2020 to 24.3% in 2024. The net profit margin also improved significantly from around 4.0% in 2020 to 10.9% in 2024. Revenue growth was strong, with a notable increase of 10.1% from 2023 to 2024, indicating healthy business expansion. Both EBIT and EBITDA margins have strengthened, signaling efficient operations. Overall, the company's income statement reflects solid financial health and growth potential, although maintaining this trajectory amidst industry fluctuations is crucial.85
Very Positive
Balance Sheet
The balance sheet of Taylor Morrison indicates strong equity growth, with stockholders' equity rising from $3.5 billion in 2020 to $5.87 billion in 2024. The debt-to-equity ratio showcases improvement, dropping significantly due to increased equity and reduced total debt in recent years. The equity ratio improved to 63.1% in 2024, highlighting the company's solid financial foundation. However, relatively high total liabilities pose a potential risk if not managed efficiently. Overall, the balance sheet is stable, though vigilance over liabilities is advised.77
Positive
Cash Flow
Taylor Morrison's cash flow analysis reveals positive trends in free cash flow, with a remarkable increase from $363 million in 2019 to $173.75 million in 2024. The operating cash flow to net income ratio, however, declined from 4.6 in 2020 to 0.24 in 2024, indicating less cash generation from operations relative to net income. Despite these fluctuations, the company maintains a positive operating cash flow, which is crucial for sustaining business operations and investments. While the cash flow is generally solid, improved cash conversion efficiency would be beneficial.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.17B | 7.42B | 8.22B | 7.50B | 6.13B | Gross Profit |
| 1.98B | 1.78B | 2.09B | 1.55B | 1.04B | EBIT |
| 1.21B | 1.08B | 1.36B | 826.92M | 571.92M | EBITDA |
| 1.25B | 1.12B | 1.48B | 919.52M | 509.18M | Net Income Common Stockholders |
| 883.31M | 768.93M | 1.05B | 663.03M | 243.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 487.15M | 798.57M | 725.58M | 834.93M | 538.14M | Total Assets |
| 9.30B | 8.67B | 8.47B | 8.73B | 7.74B | Total Debt |
| 79.00M | 2.10B | 2.58B | 3.40B | 3.01B | Net Debt |
| -408.15M | 1.30B | 1.86B | 2.57B | 2.48B | Total Liabilities |
| 3.42B | 3.34B | 3.82B | 4.76B | 4.14B | Stockholders Equity |
| 5.87B | 5.31B | 4.63B | 3.93B | 3.50B |
| Cash Flow | Free Cash Flow | |||
| 173.75M | 772.74M | 1.08B | 355.45M | 1.09B | Operating Cash Flow |
| 210.08M | 806.17M | 1.11B | 376.65M | 1.12B | Investing Cash Flow |
| -136.44M | -97.19M | -14.88M | -74.26M | -312.80M | Financing Cash Flow |
| -393.57M | -628.51M | -1.20B | -155.00K | -604.94M |
Taylor Morrison Technical Analysis
Negative
58.09
Price Trends
62.73
Negative
65.60
Negative
64.15
Negative
Market Momentum
-1.03
Positive
35.77
Neutral
12.86
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TMHC, the sentiment is Negative. The current price of 58.09 is below the 20-day moving average (MA) of 61.51, below the 50-day MA of 62.73, and below the 200-day MA of 64.15, indicating a bearish trend. The MACD of -1.03 indicates Positive momentum. The RSI at 35.77 is Neutral, neither overbought nor oversold. The STOCH value of 12.86 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TMHC.
Taylor Morrison Risk Analysis
Taylor Morrison disclosed 40 risk factors in its most recent earnings report. Taylor Morrison reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Taylor Morrison Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $41.76B | 9.36 | 19.35% | 1.09% | 2.12% | 1.63% | |
74 Outperform | $21.43B | 7.20 | 27.40% | 0.79% | 11.74% | 25.66% | |
73 Outperform | $6.05B | 7.01 | 15.80% | ― | 10.11% | 19.06% | |
69 Neutral | $10.62B | 7.35 | 20.38% | 0.86% | 5.86% | 12.20% | |
67 Neutral | $31.94B | 8.48 | 14.30% | 1.68% | 3.47% | 4.22% | |
66 Neutral | $22.01B | 14.48 | 39.23% | ― | 10.81% | 10.16% | |
59 Neutral | $12.50B | 10.40 | 2.26% | 3.63% | 1.65% | -18.81% |
* Consumer Cyclical Sector Average
Performance Comparison
TMHC
Taylor Morrison
58.09
1.31
2.31%
DHI
DR Horton
125.29
-23.67
-15.89%
LEN
Lennar
116.33
-28.62
-19.74%
NVR
NVR
7,130.75
-428.78
-5.67%
PHM
PulteGroup
101.09
-8.08
-7.40%
TOL
Toll Brothers
103.02
-14.33
-12.21%
Taylor Morrison Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -6.89% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, increased net orders, and strategic land positioning, contributing positively to the company's outlook. However, challenges were noted in the resort lifestyle segment, rising land costs, and increased incentives due to interest rates, which may impact future margins.Highlights
Strong Financial Performance
Delivered 3,571 homes at an average price of $608,000, producing nearly $2.2 billion in revenue with an adjusted home closings gross margin of 24.9%. Achieved a 30% year-over-year growth in adjusted earnings per diluted share and a 14% year-over-year increase in book value per share to $56.
Increase in Net Orders and Absorption Rates
Fourth quarter net orders increased 11% year-over-year with an absorption pace of 2.6 per community, up from 2.4 a year ago.
Growth in Financial Services
Financial services revenue was $54 million with a gross margin of 48%, up from $43 million and 46% a year ago. The capture rate increased to 89% from 86%.
Successful Online Engagement
Website traffic up 40% from a year ago. Online home reservations showed a 53% conversion to sale and a declining rate of participation with real estate agents.
Strategic Land Positioning
Controlled 86,153 homebuilding lots, representing 6.6 years of supply. 57% of these lots were controlled via options and off-balance sheet structures.
Lowlights
Challenges in the Resort Lifestyle Segment
Resort lifestyle orders declined 9% year-over-year, attributed to hurricane impacts in Florida and timing of community closeouts.
Increased Land Cost Inflation
Anticipated a step up in land cost inflation to approximately 7% this year from 4% in 2024.
Higher Incentives Due to Interest Rates
Expected step up in incentives due to increased interest rates, impacting home closings gross margin.
Company Guidance
During the Taylor Morrison Fourth Quarter 2024 Earnings Conference Call, the company provided guidance for 2025, projecting between 13,500 to 14,000 home closings with a gross margin of 23% to 24% and an SG&A ratio in the mid-9% range. The company reported a 30% year-over-year growth in adjusted earnings per diluted share and a 14% increase in book value per share, reaching $56. The fourth quarter saw 3,571 homes delivered at an average price of $608,000, generating nearly $2.2 billion in revenue with an adjusted home closings gross margin of 24.9%. Net orders increased by 11% year-over-year with an absorption pace of 2.6 per community, up from 2.4 a year ago. Taylor Morrison is focused on maintaining an annualized sales pace in the low 3% range while achieving healthy gross margins in the low to mid-20% range, despite pressures from rising interest rates and land cost inflation.Taylor Morrison Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Taylor Morrison Strengthens Board with Strategic Appointments
Positive
Feb 4, 2025
Taylor Morrison has appointed Heather Ostis, a seasoned supply chain executive from Starbucks, to its Board of Directors effective March 1, 2025. Ostis’s extensive experience in global procurement and supply chain management is seen as a strategic asset for the company as it navigates the complexities of homebuilding operations. This appointment, along with the recent addition of Fletcher Previn, underscores Taylor Morrison’s commitment to enhancing its board’s expertise in critical areas such as supply chain and IT, reflecting its focus on evolving consumer demographics and market trends.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.