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Taylor Morrison (TMHC)
NYSE:TMHC
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Taylor Morrison
(NYSE:TMHC)
79Outperform
Positive Factors
Demand and Customer Segmentation
Taylor Morrison Home is expected to have resilient demand due to its lower exposure to entry-level buyers and a focus on more affluent customer segments.
Financial Performance
Taylor Morrison is targeting a structurally higher return on equity supported by improved operational efficiencies and increased capital returns to shareholders.
Operational Performance
TMHC posted the most impressive 3Q results among the coverage, leading to increased estimates for gross margins and orders.
Negative Factors
Interest Rate Environment
The price target drops slightly from $86 to $83 due to expectations of an at-best flat interest rate environment in 2025.
Market Risks
Risks for Taylor Morrison include soft housing demand, high mortgage rates, Florida exposure, rising land prices, and tariff uncertainty.
Taylor Morrison (TMHC) vs. S&P 500 (SPY)
Market Cap
$5.95B
Dividend YieldN/A
Average Volume (3M)954.27K
Price to Earnings (P/E)6.8
Beta (1Y)1.06
Revenue Growth12.19%
EPS Growth23.15%
CountryUS
Employees3,000
SectorConsumer Cyclical
Sector Strength75
IndustryResidential Construction
Share Statistics
EPS (TTM)2.07
Shares Outstanding100,367,680
10 Day Avg. Volume755,882
30 Day Avg. Volume954,272
Financial Highlights & Ratios
PEG Ratio1.72
Price to Book (P/B)1.00
Price to Sales (P/S)0.00
P/FCF Ratio15.20
Enterprise Value/Market Cap1.29
Enterprise Value/Revenue0.24
Enterprise Value/Gross Profit3.78
Enterprise Value/Ebitda1.59
Forecast
1Y Price Target
$70.88Price Target Upside20.54% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
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 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 demonstrates strong financial health, characterized by robust profitability, efficient operational management, and solid balance sheet stability. The company's strategic focus on reducing debt and strong cash flow generation supports its growth trajectory and financial sustainability. While the decrease in cash reserves warrants attention, overall financial performance remains positive with strong margins and low leverage.Income Statement
Taylor Morrison shows strong financial performance with improving gross and net profit margins. The TTM gross profit margin is 24.27%, reflecting efficient cost management. The net profit margin of 10.84% indicates solid profitability. Revenue growth is positive, with a 12.74% increase from 2023 to 2024, and a further 2.4% growth into the TTM period. EBIT and EBITDA margins are robust at 14.99% and 15.36%, respectively, supporting strong operational performance.85
Very Positive
Balance Sheet
The balance sheet reflects financial stability with a debt-to-equity ratio of 0.01, indicating low leverage. The equity ratio of 63.49% suggests strong equity financing. Return on equity stands at 15.22%, showcasing effective use of shareholders' funds. However, a decline in cash reserves needs monitoring, as cash and short-term investments decreased over the period.78
Positive
Cash Flow
Cash flow analysis reveals a healthy free cash flow growth rate of 123%, highlighting strong cash generation capabilities. The operating cash flow to net income ratio of 0.47 and free cash flow to net income ratio of 0.43 indicate efficient cash flow management. Although financing cash flows are negative, this aligns with debt reduction efforts, which is a positive strategic move.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 8.36B | 8.17B | 7.42B | 8.22B | 7.50B | 6.13B | Gross Profit |
| 2.03B | 1.98B | 1.78B | 2.09B | 1.55B | 1.04B | EBIT |
| 1.25B | 1.21B | 1.08B | 1.36B | 826.92M | 571.92M | EBITDA |
| 1.29B | 1.25B | 1.12B | 1.48B | 919.52M | 509.18M | Net Income Common Stockholders |
| 906.50M | 883.31M | 768.93M | 1.05B | 663.03M | 243.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 557.39M | 487.15M | 798.57M | 725.58M | 834.93M | 538.14M | Total Assets |
| 8.91B | 9.30B | 8.67B | 8.47B | 8.73B | 7.74B | Total Debt |
| 2.17B | 2.20B | 2.10B | 2.58B | 3.40B | 3.01B | Net Debt |
| 1.62B | 1.71B | 1.30B | 1.86B | 2.57B | 2.48B | Total Liabilities |
| 3.48B | 3.42B | 3.34B | 3.82B | 4.76B | 4.14B | Stockholders Equity |
| 5.43B | 5.87B | 5.31B | 4.63B | 3.93B | 3.50B |
| Cash Flow | Free Cash Flow | ||||
| 387.48M | 173.75M | 772.74M | 1.08B | 355.45M | 1.09B | Operating Cash Flow |
| 423.21M | 210.08M | 806.17M | 1.11B | 376.65M | 1.12B | Investing Cash Flow |
| -153.66M | -136.44M | -97.19M | -14.88M | -74.26M | -312.80M | Financing Cash Flow |
| -448.84M | -393.57M | -628.51M | -1.20B | -155.00K | -604.94M |
Taylor Morrison Technical Analysis
Negative
58.80
Price Trends
58.53
Positive
60.68
Negative
64.07
Negative
Market Momentum
0.36
Negative
50.31
Neutral
34.01
Neutral
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 58.8 is above the 20-day moving average (MA) of 58.60, above the 50-day MA of 58.53, and below the 200-day MA of 64.07, indicating a neutral trend. The MACD of 0.36 indicates Negative momentum. The RSI at 50.31 is Neutral, neither overbought nor oversold. The STOCH value of 34.01 is Neutral, 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $20.66B | 7.37 | 25.52% | 0.81% | 8.86% | 13.60% | |
79 Outperform | $10.55B | 7.30 | 20.38% | 0.89% | 5.86% | 12.20% | |
79 Outperform | $5.95B | 6.83 | 15.97% | ― | 12.19% | 23.15% | |
76 Outperform | $21.38B | 14.83 | 38.25% | ― | 8.81% | 1.79% | |
72 Outperform | $4.88B | 6.87 | 14.58% | 2.29% | -0.68% | -7.99% | |
71 Outperform | $29.20B | 8.10 | 14.97% | 1.80% | 2.03% | -3.80% | |
62 Neutral | $6.98B | 11.38 | 2.86% | 3.90% | 2.64% | -22.07% |
* Consumer Cyclical Sector Average
Performance Comparison
TMHC
Taylor Morrison
58.80
-0.23
-0.39%
LEN
Lennar
109.44
-44.65
-28.98%
MTH
Meritage
66.52
-20.95
-23.95%
NVR
NVR
7,206.78
-413.44
-5.43%
PHM
PulteGroup
101.31
-15.75
-13.45%
TOL
Toll Brothers
104.51
-24.66
-19.09%
Taylor Morrison Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: 0.02%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Taylor Morrison's strong financial performance in the first quarter of 2025, with notable increases in revenue, earnings per share, and book value. However, there are significant concerns regarding declining net orders, elevated spec home inventory, and increased incentives due to macroeconomic uncertainties. Overall, the sentiment reflects a cautious outlook amidst strong financial results.Q1-2025 Updates
Positive Updates
Strong Home Closings Revenue
Taylor Morrison delivered 3,048 homes at an average price of $600,000, resulting in $1.8 billion of home closings revenue, up 12% year-over-year.
Improved Gross Margin and Earnings Per Share
Adjusted home closings gross margin increased to 24.8%, up 80 basis points year-over-year. Adjusted earnings per diluted share increased by 25%.
Growth in Book Value Per Share
Book value per share grew 16% to approximately $58.
Increased SG&A Leverage
The company achieved 70 basis points of SG&A leverage.
Resilient Sales Pace
Monthly absorption rate increased to 3.3 per community from 2.6 in the fourth quarter, although down from 3.7 a year ago.
Strong Financial Position
Ended the quarter with liquidity of approximately $1.3 billion, including $378 million of unrestricted cash.
Record Share Repurchases
Repurchased 2.2 million shares of common stock for $135 million, targeting $350 million in total repurchases for 2025.
Negative Updates
Decline in Net Orders
Net orders decreased by 8% from the previous year's first quarter.
High Spec Home Inventory
Finished inventory at quarter end was elevated at 2.4 homes per community, leading to a reduction in starts by 6% year-over-year.
Reduced Guidance for Home Deliveries
Expectation of delivering between 13,000 to 13,500 homes this year, down from prior guidance of 13,500 to 14,000 homes.
Anticipated Increase in Incentives
Expect incentives to rise more meaningfully in the second quarter due to higher spec home inventory.
Projected Lower Average Closing Price
Average closing price expected to moderate to approximately $585,000 in the second quarter.
Macroeconomic Uncertainties
Challenges from rising interest rates, macroeconomic, and political uncertainties impacting buyer sentiment.
Weak Performance in Entry-Level Sales
Entry-level sales declined steeply, down 21% year-over-year.
Company Guidance
During Taylor Morrison's First Quarter 2025 Earnings Conference Call, the company provided guidance that highlighted a strong start to the year with 3,048 homes delivered at an average price of $600,000, generating $1.8 billion in home closings revenue, a 12% year-over-year increase. The adjusted home closings gross margin rose by 80 basis points to 24.8%, while SG&A leverage improved by 70 basis points, leading to a 25% increase in adjusted earnings per diluted share. The company experienced a sales absorption rate increase to 3.3 per community, although this was down from 3.7 a year ago. Despite macroeconomic pressures, the firm anticipates delivering between 13,000 to 13,500 homes this year with a gross margin around 23%. Taylor Morrison has adjusted its expected land investment to $2.4 billion from $2.6 billion and plans to repurchase approximately $350 million of shares. The long-term aim remains to achieve 20,000 closings by 2028, supported by strategic rationalization and product optimization.Taylor Morrison Corporate Events
Executive/Board Changes
Taylor Morrison Announces Executive Leadership Transition
Neutral
Mar 14, 2025
On March 13, 2025, Taylor Morrison Home Corporation announced the retirement of Darrell Sherman, Executive Vice President, Chief Legal Officer, and Secretary, effective May 31, 2025, after nearly 16 years of service. Sherman will be succeeded by Todd Merrill, currently Vice President and General Counsel of Operations, effective June 1, 2025. Sherman’s departure is due to his new role as a mission president for the Church of Jesus Christ of Latter-day Saints. The transition is expected to be smooth, with Merrill’s extensive experience within the company positioning him well to support Taylor Morrison’s future growth and strategic initiatives.
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.