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Taylor Morrison (TMHC)
NYSE:TMHC
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Taylor Morrison
(NYSE:TMHC)
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Rating:77Outperform
Price Target:
$77.00
▲(16.86% Upside)
Action:ReiteratedDate:02/19/26
TMHC scores well on solid financial footing (improved leverage, resilient profitability despite margin pressure) and supportive technical momentum, with valuation a clear positive given the low P/E. The main offset is the earnings outlook’s near-term margin and demand/backlog risk tied to elevated spec inventory.
Positive Factors
Stronger balance sheet and lower leverage
Material deleveraging and sizable liquidity give Taylor Morrison durable financial flexibility. Lower leverage and nearly $1.8B of liquidity support land investment, share repurchases, and absorption of cyclical slowdowns without forcing distress asset sales, improving multi-quarter resilience.
Consistent free cash flow generation
High FCF conversion versus net income indicates underlying earnings quality and the ability to fund capital allocation. Sustained cash conversion supports buybacks, land investment and debt discipline, giving the company durable internal funding even if external capital costs rise.
Scale, diversified platforms and delivery capacity
Large delivery scale and diversified growth platforms (build-to-rent Yardley, resort‑lifestyle Esplanade) strengthen competitive position and revenue optionality. Scale enables purchasing power, geographic diversification, and ability to shift between spec and to‑be‑built channels over multiple quarters.
Negative Factors
Elevated spec inventory and unsold homes
A high spec mix and ~3,000 unsold homes tie up capital and amplify exposure to price competition and absorption delays. This structural inventory overhang can constrain margin recovery and cash flow until inventory is sold or converted to higher‑margin to‑be‑built orders over several quarters.
Margin compression and rising operating costs
Multi-hundred basis point margin erosion and anticipated SG&A step‑up materially reduce long‑run profitability. With unit economics pressured by higher lot and interest costs, recovering prior margin levels will require sustained improvement in mix, fewer concessions, or structural cost reductions.
Lower backlog and softer demand visibility
A reduced backlog and moderating net orders weaken near‑term revenue visibility and increase reliance on seasonal selling. Lower contracted volume raises execution risk for planned deliveries and forces continued emphasis on clearing spec inventory, pressuring margins and working capital over several quarters.
Taylor Morrison (TMHC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.35B
Dividend YieldN/A
Average Volume (3M)1.05M
Price to Earnings (P/E)8.5
Beta (1Y)0.78
Revenue Growth6.98%
EPS Growth9.74%
CountryUS
Employees3,000
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)1.76
Shares Outstanding96,333,670
10 Day Avg. Volume1,123,472
30 Day Avg. Volume1,048,332
Financial Highlights & Ratios
PEG Ratio-1.19
Price to Book (P/B)0.92
Price to Sales (P/S)0.72
P/FCF Ratio7.22
Enterprise Value/Market Cap1.24
Enterprise Value/Revenue0.97
Enterprise Value/Gross Profit4.17
Enterprise Value/Ebitda6.77
Forecast
1Y Price Target
$71.80Price Target Upside8.97% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)5.7
Revenue Forecast (FY)$6.81B
Taylor Morrison Business Overview & Revenue Model
Company DescriptionTaylor Morrison Home Corporation, together with its subsidiaries, operates as a public homebuilder in the United States. The company designs, builds, and sells single and multi-family detached and attached homes; and develops lifestyle and master-planned communities. It also develops and constructs multi-use properties consisting of commercial space, retail, and multi-family properties under the Urban Form brand name; and offers title insurance and closing settlement services, as well as financial services. In addition, the company operates under the Taylor Morrison, William Lyon Signature, and Darling Homes brand names in Arizona, California, Colorado, Florida, Georgia, Nevada, North and South Carolina, Oregon, Texas, and Washington. Taylor Morrison Home Corporation was founded in 1936 and is headquartered in Scottsdale, Arizona.
How the Company Makes MoneyTaylor Morrison generates revenue primarily through the sale of newly constructed homes, which represent its core revenue stream. The company earns money by acquiring land, developing residential communities, and building homes that are then sold to individual buyers. Additionally, TMHC generates revenue from the sale of homes in its active adult and multi-family segments. The company also benefits from strategic partnerships with suppliers and subcontractors, which help control costs and improve efficiency in the construction process. Furthermore, Taylor Morrison may engage in joint ventures and collaborations with other developers, enhancing its market reach and financial performance.
Taylor Morrison Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Positive
The call communicated a largely constructive operating and capital return story: Taylor Morrison delivered nearly 13,000 homes in 2025, maintained strong adjusted profitability (23% adjusted gross margin), improved cycle times and liquidity, and returned substantial capital to shareholders via buybacks while expanding strategic platforms (Esplanade and Yardley). Near-term headwinds include a lower-than-normal backlog, an elevated spec mix that pressured margins (Q1 guide ~20%), an unsold inventory of ~3,000 homes, and modestly higher interest and lot cost pressures. Management outlined concrete actions (rightsizing spec inventory, shifting land investment toward core/move-up and resort lifestyle markets, and scaling to-be-built sales) that support a recovery in margins later in 2026 and re-acceleration in 2027. Overall, positives around profitability, balance sheet strength, operational improvements, and disciplined capital allocation outweigh the near-term margin and demand challenges.Q4-2025 Updates
Positive Updates
Strong Full-Year Deliveries and Revenue
Delivered 12,997 homes in 2025 (nearly 13,000) at an average price of $597, generating approximately $7.8 billion of home closings revenue for the year.
Resilient Adjusted Profitability
Full-year adjusted net income of $830 million ($8.24 per diluted share) and adjusted home closings gross margin of 23%; reported net income $783 million ($7.77 per diluted share).
Industry-Leading Margin / SG&A Discipline
Fourth-quarter home closings gross margin of 21.8% (slightly above guidance ~21.5%); full-year SG&A improved 40 basis points to 9.5% of home closings revenue, demonstrating overhead discipline.
Capital Returns and Share Repurchases
Repurchased $381 million of stock in 2025 (6.5 million shares, ~6% of beginning diluted share count); Q4 repurchases of $71 million; Board increased repurchase authorization to $1 billion and expects ~$400 million of repurchases in 2026.
Improved Balance Sheet and Liquidity
Ended Q4 with approximately $1.8 billion of liquidity, including $850 million unrestricted cash and $928 million available on the revolver; net homebuilding debt-to-capitalization improved to 17.8% from 20% a year ago.
Operational Efficiency: Faster Cycle Times
Construction cycle times improved more than five weeks versus prior year and over nine weeks versus two years ago, enabling greater production flexibility and later starts for year-end closings.
Inventory Management Progress
Total spec count down 11% sequentially; management reported a 24% reduction in spec home inventory since earlier in 2025, and cancellations improved to 12.5% of gross orders (down from 15.4% prior quarter).
Diversification & Growth Platforms
Plan to accelerate community openings in 2026 with well over 100 new outlets (including 20+ Esplanade outlets); Yardley build-to-rent platform represents ~10,400 sites across nine markets supported by a $3 billion land bank partnership.
Financial Services Strength
Financial services revenue of ~$49 million in the quarter with an 88% capture rate; mortgage customers show strong credit profile (average score 750, avg down payment 21%, avg household income >$183k).
Negative Updates
Quarterly Order & Pace Softness
Net orders in Q4 were 2,499 homes, down 5% year-over-year; monthly absorption pace moderated to 2.4 homes per community from 2.6 a year ago, indicating softer demand dynamics.
Elevated Spec Mix Pressuring Margins
Spec homes accounted for 72% of sales and 66% of closings in Q4 (up from 61% and 54% in 2024), contributing to lower margins; management expects Q1 home closings gross margin to be ~20% (exclusive of inventory charges) and indicated Q1 may be the year’s low point.
Reduced Backlog and Dependence on Spring Selling
Entered 2026 with a lower-than-normal backlog of just over 2,800 homes, making full-year deliveries and margins more dependent on spring sales performance.
Substantial Unsold Inventory Remaining
Ended the year with nearly 3,000 unsold homes, including just over 1,200 finished homes; management expects continued focused sales efforts that may temporarily depress early-2026 gross margins.
Margin Contraction vs Prior Year
Full-year reported home closings gross margin was 22.5% (22.5% reported; 23% adjusted) versus reported 24.4% (24.5% adjusted) in 2024 — a multi-hundred basis point decline year-over-year.
Rising Interest and Land Cost Pressure
Net interest expense doubled to approximately $12 million in the quarter (from ~$6 million year-ago) and is expected to increase modestly in 2026; lot costs are expected to be up in the mid-single-digit range in 2026.
Shift in Controlled Lot Base and Lot Count Decline
Owned/controlled lots declined to 78,835 at year-end (from 86,153 at end of 2024) and the controlled ratio declined; management noted some walkaways and takedowns and expects controlled ratio to be temporary below target.
Regional Weakness: Central Region / Austin
Central region performance was slower due to softness across Texas, particularly Austin, where order volumes pulled back materially (though margins held up in many Texas markets).
Near-Term SG&A Increase Expected
Management expects SG&A ratio to move to the mid-10% range in 2026 (up from 9.5% in 2025), implying higher operating leverage pressure next year before margin recovery.
Company Guidance
Guidance for 2026 called for roughly 11,000 home deliveries (about 2,200 in Q1), average closing price ~ $580,000 in Q1 and $580k–$590k for the full year, and Q1 home-closing gross margin of ~20% (with margins expected to gradually improve later in the year); the company plans high-single-digit outlet growth to 365–370 outlets by year-end with well over 100 new outlets (including >20 Esplanade), entered the year with a backlog of just over 2,800 homes, and expects to invest about $2.0 billion in land in 2026 (lot costs up mid-single-digits); SG&A is expected in the mid‑10% range, net interest expense to increase modestly, and the firm intends to repurchase ~ $400 million of stock (average diluted shares ~95M for the year, ~98M in Q1); liquidity remains strong at ≈ $1.8 billion, net homebuilding debt-to-cap ~17.8%, and management noted spec inventory of ~3,000 unsold homes (≈1,232 finished), 5,682 homes under construction, Q4 starts of 2,136, Q4 net orders of 2,499 (‑5% Y/Y) with cancellations at 12.5%, and continued emphasis on improving mix toward higher‑margin to‑be‑built sales.Taylor Morrison Financial Statement Overview
Summary
Solid overall fundamentals with improved leverage (debt-to-equity down to ~0.37) and healthy profitability, but recent margin compression (gross and net) and choppy revenue keep performance below top-tier; cash generation is generally strong versus net income but operating cash flow is notably volatile.Income Statement
Revenue has been relatively stable but choppy, with a slight decline in 2025 (annual) after modest growth in 2024 and a dip in 2023. Profitability remains solid for the industry, but margins have compressed from the 2022 peak (gross margin ~25.7% to ~23.0% in 2025; net margin ~12.8% to ~9.6%), and net income also stepped down in 2025 versus 2024. Overall: good earnings power, but a weaker recent trajectory and margin pressure keep the score below top-tier.74
Positive
Balance Sheet
Leverage looks manageable and improved versus earlier years: debt-to-equity has come down meaningfully from ~0.86 in 2020–2021 to ~0.37 in 2024–2025, alongside steady equity growth. Returns on equity remain healthy (mid-teens in 2023–2024, ~12% in 2025), though they have cooled from the 2022 high. Overall: strengthening balance sheet and moderate leverage, with some normalization in returns recently.78
Positive
Cash Flow
Free cash flow conversion is consistently strong versus net income (generally ~0.83–0.97), indicating earnings quality is solid. However, operating cash flow is volatile year-to-year (very low in 2024, then strong in 2025), which is a key risk in a homebuilder given working-capital swings. The sharp rebound in 2025 (including strong free cash flow growth) is a positive, but variability prevents a higher score.70
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 8.12B | 8.17B | 7.42B | 8.22B | 7.50B |
| Gross Profit | 1.87B | 2.01B | 1.79B | 2.12B | 1.56B |
| EBITDA | 1.14B | 1.28B | 1.13B | 1.51B | 894.79M |
| Net Income | 782.50M | 883.31M | 768.93M | 1.05B | 663.03M |
Balance Sheet | |||||
| Total Assets | 9.84B | 9.30B | 8.67B | 8.47B | 8.73B |
| Cash, Cash Equivalents and Short-Term Investments | 851.23M | 487.15M | 798.57M | 724.49M | 832.82M |
| Total Debt | 2.36B | 2.20B | 2.10B | 2.58B | 3.40B |
| Total Liabilities | 3.53B | 3.42B | 3.34B | 3.82B | 4.76B |
| Stockholders Equity | 6.31B | 5.87B | 5.31B | 4.63B | 3.93B |
Cash Flow | |||||
| Free Cash Flow | 807.37M | 173.75M | 772.74M | 1.08B | 355.45M |
| Operating Cash Flow | 847.75M | 210.08M | 806.17M | 1.11B | 376.65M |
| Investing Cash Flow | -185.17M | -136.44M | -97.19M | -14.88M | -74.26M |
| Financing Cash Flow | -298.51M | -393.57M | -628.51M | -1.20B | -155.00K |
Taylor Morrison Technical Analysis
Positive
65.89
Price Trends
63.06
Positive
62.06
Positive
62.76
Positive
Market Momentum
0.95
Positive
53.39
Neutral
30.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TMHC, the sentiment is Positive. The current price of 65.89 is above the 20-day moving average (MA) of 65.71, above the 50-day MA of 63.06, and above the 200-day MA of 62.76, indicating a bullish trend. The MACD of 0.95 indicates Positive momentum. The RSI at 53.39 is Neutral, neither overbought nor oversold. The STOCH value of 30.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $6.35B | 8.48 | 12.87% | ― | 6.98% | 9.74% | |
77 Outperform | $14.90B | 11.23 | 17.03% | 0.70% | 1.11% | -10.03% | |
76 Outperform | $26.36B | 12.34 | 17.67% | 0.78% | 1.76% | -4.24% | |
75 Outperform | $21.00B | 17.19 | 33.18% | ― | 3.61% | -6.94% | |
73 Outperform | $46.47B | 14.56 | 13.63% | 1.14% | -6.93% | -19.41% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $28.01B | 14.32 | 8.26% | 1.91% | -3.78% | -44.21% |
* Consumer Cyclical Sector Average
TMHC
Taylor Morrison
65.89
5.40
8.93%
DHI
DR Horton
160.39
36.18
29.12%
LEN
Lennar
114.36
-1.50
-1.30%
NVR
NVR
7,517.79
317.50
4.41%
PHM
PulteGroup
137.20
35.98
35.54%
TOL
Toll Brothers
157.24
49.77
46.31%
Taylor Morrison Corporate Events
Business Operations and StrategyPrivate Placements and Financing
Taylor Morrison Secures New $1 Billion Revolving Credit Facility
Positive
Dec 23, 2025
On December 22, 2025, Taylor Morrison Communities, Inc. amended and restated its existing revolving credit agreement, securing a $1 billion unsecured revolving loan facility with an uncommitted accordion feature of up to an additional $400 million and a five-year maturity from the closing date. The updated credit agreement sets interest rates and commitment fees tied to the company’s capitalization ratio and investment-grade ratings, introduces financial covenants including a maximum capitalization ratio and minimum consolidated tangible net worth, and maintains customary restrictive covenants and events of default, shaping the company’s liquidity profile and leverage discipline while preserving operational flexibility through voluntary prepayments and the absence of scheduled amortization.
The most recent analyst rating on (TMHC) stock is a Buy with a $70.00 price target. To see the full list of analyst forecasts on Taylor Morrison stock, see the TMHC Stock Forecast page.
Executive/Board Changes
Taylor Morrison Appoints Amanda Whalen to Board
Positive
Dec 16, 2025
On December 10, 2025, Taylor Morrison Home Corporation announced the appointment of Amanda Whalen as an independent member of its Board of Directors, effective March 1, 2026. Whalen, who brings over 25 years of finance and strategic leadership experience, is expected to contribute significantly to the company’s focus on long-term growth and digital business model transformation. Her appointment increases the board’s composition from eight to nine members, enhancing the board’s range of skills and experience.
The most recent analyst rating on (TMHC) stock is a Buy with a $69.00 price target. To see the full list of analyst forecasts on Taylor Morrison stock, see the TMHC Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.