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5 Reasons to Add Taylor Morrison (TMHC) to Your Portfolio
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The housing/homebuilding industry has been riding high on steady job and wage growth, affordable mortgage rates, rising rentals, rapidly increasing household formation and a limited supply of inventory. Meanwhile, the rise in mortgage rates seems to be having a minimal effect on the industry.
One such company cashing in on the positive momentum is Taylor Morrison Home Corporation (TMHC - Free Report) – a homebuilder and land developer engaged in building single-family detached and attached homes for first-time buyers, move-up families for luxury and active adult customers. Let us delve deeper into the other factors which make this Zacks Rank #2(Buy) stock a lucrative pick.
Stock Price Movement: Taylor Morrison’s shares have gained 53.2% in the last one year, compared to the Zacks categorized Building Residential/Commercial industry’s 20.1% rise. That said, we have noticed that Taylor Morrison has outperformed the industry in the 4-week, 12-week and 52-week frame. The overall improvement in the U.S. economy along with the improving housing momentum is expected to drive results in 2017.
Valuation Looks Rational: Taylor Morrison has a Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this perspective.
We find the price-to-book ratio as the best multiple for valuing homebuilders because of their asset-driven nature. Taylor Morrison currently has a trailing 12 month P/B ratio of 1.27, comparing favorably with the industry’s P/B ratio of 1.84. Hence, its lower-than-market position hints at more upside in the quarters ahead.
Also, the company has a trailing 12-months price-to-earnings (P/E) ratio of 12.95, while the industry’s average stands at 13.89. Moreover, its forward P/E ratio (price compared to this year’s earnings) is at 12.26. This indicates that a slightly more value-oriented path may be ahead for Taylor Morrison.
Estimate Revisions: Earnings estimates for the current year and the next have gone up 2.1% and 4.2%, respectively, over the past 60 days. The upside in earnings estimates revisions shows unwavering confidence that analysts have in the company. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Taylor Morrison Home Corporation Price and Consensus
Notably, Taylor Morrison surpassed estimates in all of the past four quarters, with an average beat of 9.46%. Earnings are expected to increase 11.8% in 2017.
Industry Outlook Positive: The Zacks Building Residential/Commercial industry has outperformed the broader market in the last six months. Currently, the industry ranks among the top 14% (out of more than 250 industries). Along with the strong past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future.
VGM Score: Taylor Morrison has a VGM Score of 'A'. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of 'A' or 'B' when combined with a Zacks Rank #1 or 2 (Buy) make solid investment choices.
Bottom Line
Taylor Morrison’s robust Zacks industry Rank and a solid Zacks Rank instill investor confidence. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a solid investment option in Taylor Morrison.
Other Stocks to Consider
Other top-ranked stocks in the industry include Lyon William Homes , Lennar Corporation (LEN - Free Report) and KB Home (KBH - Free Report) .
Lennar, a Zacks Rank #2 (Buy) stock, is expected to witness 7.5% growth in fiscal 2017 earnings.
KB Home, also a Zacks Rank #2 stock, is expected to see 43.3% growth in fiscal 2017 earnings.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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5 Reasons to Add Taylor Morrison (TMHC) to Your Portfolio
The housing/homebuilding industry has been riding high on steady job and wage growth, affordable mortgage rates, rising rentals, rapidly increasing household formation and a limited supply of inventory. Meanwhile, the rise in mortgage rates seems to be having a minimal effect on the industry.
One such company cashing in on the positive momentum is Taylor Morrison Home Corporation (TMHC - Free Report) – a homebuilder and land developer engaged in building single-family detached and attached homes for first-time buyers, move-up families for luxury and active adult customers. Let us delve deeper into the other factors which make this Zacks Rank #2(Buy) stock a lucrative pick.
Stock Price Movement: Taylor Morrison’s shares have gained 53.2% in the last one year, compared to the Zacks categorized Building Residential/Commercial industry’s 20.1% rise. That said, we have noticed that Taylor Morrison has outperformed the industry in the 4-week, 12-week and 52-week frame. The overall improvement in the U.S. economy along with the improving housing momentum is expected to drive results in 2017.
Valuation Looks Rational: Taylor Morrison has a Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this perspective.
We find the price-to-book ratio as the best multiple for valuing homebuilders because of their asset-driven nature. Taylor Morrison currently has a trailing 12 month P/B ratio of 1.27, comparing favorably with the industry’s P/B ratio of 1.84. Hence, its lower-than-market position hints at more upside in the quarters ahead.
Also, the company has a trailing 12-months price-to-earnings (P/E) ratio of 12.95, while the industry’s average stands at 13.89. Moreover, its forward P/E ratio (price compared to this year’s earnings) is at 12.26. This indicates that a slightly more value-oriented path may be ahead for Taylor Morrison.
Estimate Revisions: Earnings estimates for the current year and the next have gone up 2.1% and 4.2%, respectively, over the past 60 days. The upside in earnings estimates revisions shows unwavering confidence that analysts have in the company. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Taylor Morrison Home Corporation Price and Consensus
Taylor Morrison Home Corporation Price and Consensus | Taylor Morrison Home Corporation Quote
Notably, Taylor Morrison surpassed estimates in all of the past four quarters, with an average beat of 9.46%. Earnings are expected to increase 11.8% in 2017.
Industry Outlook Positive: The Zacks Building Residential/Commercial industry has outperformed the broader market in the last six months. Currently, the industry ranks among the top 14% (out of more than 250 industries). Along with the strong past performance of the industry, a good industry rank signals that the stock is likely to benefit from favorable broader factors in the immediate future.
VGM Score: Taylor Morrison has a VGM Score of 'A'. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics. In fact, our research shows that stocks with VGM Scores of 'A' or 'B' when combined with a Zacks Rank #1 or 2 (Buy) make solid investment choices.
Bottom Line
Taylor Morrison’s robust Zacks industry Rank and a solid Zacks Rank instill investor confidence. Add to this the positive estimate revisions and robust value metrics, and we believe that we have a solid investment option in Taylor Morrison.
Other Stocks to Consider
Other top-ranked stocks in the industry include Lyon William Homes , Lennar Corporation (LEN - Free Report) and KB Home (KBH - Free Report) .
Lyon William sports a Zacks Rank #1. Full-year 2017 earnings for the company are expected to increase 38.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lennar, a Zacks Rank #2 (Buy) stock, is expected to witness 7.5% growth in fiscal 2017 earnings.
KB Home, also a Zacks Rank #2 stock, is expected to see 43.3% growth in fiscal 2017 earnings.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>