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Taylor Morrison (TMHC) Hits 52-Week High on Low Mortgage Rates
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Taylor Morrison Home Corporation (TMHC - Free Report) touched a new 52-week high of $35.03 on Dec 10, 2021. The stock pulled back to end the trading session at $34.97, up 2.9% from the previous day’s closing price of $33.97. The uptick was probably due to low mortgage rates and increased applications.
The company has been benefiting from solid housing market fundamentals, improving geographical presence and strategic moves. Also, its focus on entry-level, first-time and move-up as well as luxury and active adult buyers bodes well.
In addition to Taylor Morrison, D.R. Horton, Inc. (DHI - Free Report) , Lennar Corporation (LEN - Free Report) , and Toll Brothers, Inc. (TOL - Free Report) also achieved their respective 52-week high of $109.76, $117.25, and $74.67 on Friday. The three companies have also gained 57.1%, 58.2%, and 68.6%, respectively, in the past year.
Let’s delve deeper into the factors supporting growth.
Favorable Housing Backdrop: The U.S. housing market is witnessing an impressive comeback on major data points post COVID-led shutdowns, with home sales rising at a record pace, defying low inventory levels, broad-based public health risks and supply chain woes. October home sales data depicts the true picture of the same.
For the first nine months of 2021, Taylor Morrison reported revenue and earnings per share growth of 9.3% and 160.3% year over year, respectively. The results benefited from solid execution of homebuilding and financial services businesses. Also, robust housing market conditions added to its bliss. Net sales order and backlog as of Sep 30, 2021 improved 24.8% and 63.2%, respectively.
Business Initiatives: Taylor Morrison has a trend of generating improved profits backed by various strategic initiatives. The company’s impressive surprise history is a testimony to the fact. It has been witnessing solid demand, especially from first-time buyers. Move-up buyers have represented the most consistent behavior since 2020 with record sales and low cancellations, followed by first-time buyers.
In addition to focusing on the buyers market, it has been building homes on a spec basis, which means a new property is finished or nearly completed before it is sold. Also, it is fulfilling the needs of millennials and baby boomers who want affordable homes and highly-desirable communities. In fact, it has been witnessing good traction at lower price points.
Acquisition & Geographical Expansion: Acquisitions are an important part of Taylor Morrison’s growth strategy. The acquisition of William Lyon Homes — a national homebuilder and developer — on Feb 6 enabled the company to expand its geographic scope in all the three major markets — Washington, Oregon and Nevada. Also, it acquired Urban Form Development, LLC, which primarily develops and constructs multi-use properties like combinations of commercial space, retail as well as multifamily units.
Upbeat View: For fourth-quarter 2021, Taylor Morrison expects home closings of 4,600 homes and average active community count to be in line with the third quarter (338). For fourth-quarter 2020, home closings and average active community count were 3,082 and 368, respectively. GAAP home closings gross margin is likely to be 21% for the quarter (up from 18.3% reported in the prior-year period).
For 2021, home closings are expected to be 14,000 and average active community count is likely to be 335-340. Home closings and average active community count totaled 12,524 and 386, respectively, in 2020. GAAP home closings gross margin is anticipated in the low-20% range, while SG&A, as a percentage of home closings revenues, is projected in the mid-9% range. In 2020, it generated GAAP home closings gross margin of 16.6% and SG&A of 9.8%. The company expects to spend $2 billion on land and development compared with $1.4 billion in 2020.
The company has solid prospects, as is evident from the Zacks Consensus Estimate for fourth-quarter earnings of $2.13 per share, which indicates 195.8% year-over-year growth. Meanwhile, earnings estimates for 2021 and 2022 indicate 171.8% and 39.2% year-over-year growth, respectively. TMHC’s earnings surpassed analysts’ expectations in 19 of the trailing 22 quarters.
This luxury homebuilder has an impressive VGM Score of A, supported by a Value Score of A. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics.
A Brief Overview of the Other Stocks
D.R. Horton currently carries a Zacks Rank #3. This Texas-based prime homebuilder continues to gain from industry-leading market share, solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.
D.R. Horton’s earnings are expected to rise 24.7% year over year in fiscal 2022.
Lennar, which currently carries a Zacks Rank #2 (Buy), is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn is resulting in higher operating leverage.
Lennar’s earnings for fiscal 2021 and 2022 are expected to rise 78.5% and 7.1% year over year, respectively.
Toll Brothers currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening the product lines, price points and geographies.
Toll Brothers’ earnings for fiscal 2022 are expected to rise 33.2% year over year.
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Taylor Morrison (TMHC) Hits 52-Week High on Low Mortgage Rates
Taylor Morrison Home Corporation (TMHC - Free Report) touched a new 52-week high of $35.03 on Dec 10, 2021. The stock pulled back to end the trading session at $34.97, up 2.9% from the previous day’s closing price of $33.97. The uptick was probably due to low mortgage rates and increased applications.
The company has been benefiting from solid housing market fundamentals, improving geographical presence and strategic moves. Also, its focus on entry-level, first-time and move-up as well as luxury and active adult buyers bodes well.
Taylor Morrison — a Zacks Rank #3 (Hold) stock — has gained 38.9% in the past year, outperforming the Zacks Building Products - Home Builders industry, Zacks Construction sector, and S&P 500 Index’s 37.8%, 35.7%, and 31.6% growth, respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In addition to Taylor Morrison, D.R. Horton, Inc. (DHI - Free Report) , Lennar Corporation (LEN - Free Report) , and Toll Brothers, Inc. (TOL - Free Report) also achieved their respective 52-week high of $109.76, $117.25, and $74.67 on Friday. The three companies have also gained 57.1%, 58.2%, and 68.6%, respectively, in the past year.
Let’s delve deeper into the factors supporting growth.
Favorable Housing Backdrop: The U.S. housing market is witnessing an impressive comeback on major data points post COVID-led shutdowns, with home sales rising at a record pace, defying low inventory levels, broad-based public health risks and supply chain woes. October home sales data depicts the true picture of the same.
For the first nine months of 2021, Taylor Morrison reported revenue and earnings per share growth of 9.3% and 160.3% year over year, respectively. The results benefited from solid execution of homebuilding and financial services businesses. Also, robust housing market conditions added to its bliss. Net sales order and backlog as of Sep 30, 2021 improved 24.8% and 63.2%, respectively.
Business Initiatives: Taylor Morrison has a trend of generating improved profits backed by various strategic initiatives. The company’s impressive surprise history is a testimony to the fact. It has been witnessing solid demand, especially from first-time buyers. Move-up buyers have represented the most consistent behavior since 2020 with record sales and low cancellations, followed by first-time buyers.
In addition to focusing on the buyers market, it has been building homes on a spec basis, which means a new property is finished or nearly completed before it is sold. Also, it is fulfilling the needs of millennials and baby boomers who want affordable homes and highly-desirable communities. In fact, it has been witnessing good traction at lower price points.
Acquisition & Geographical Expansion: Acquisitions are an important part of Taylor Morrison’s growth strategy. The acquisition of William Lyon Homes — a national homebuilder and developer — on Feb 6 enabled the company to expand its geographic scope in all the three major markets — Washington, Oregon and Nevada. Also, it acquired Urban Form Development, LLC, which primarily develops and constructs multi-use properties like combinations of commercial space, retail as well as multifamily units.
Upbeat View: For fourth-quarter 2021, Taylor Morrison expects home closings of 4,600 homes and average active community count to be in line with the third quarter (338). For fourth-quarter 2020, home closings and average active community count were 3,082 and 368, respectively. GAAP home closings gross margin is likely to be 21% for the quarter (up from 18.3% reported in the prior-year period).
For 2021, home closings are expected to be 14,000 and average active community count is likely to be 335-340. Home closings and average active community count totaled 12,524 and 386, respectively, in 2020. GAAP home closings gross margin is anticipated in the low-20% range, while SG&A, as a percentage of home closings revenues, is projected in the mid-9% range. In 2020, it generated GAAP home closings gross margin of 16.6% and SG&A of 9.8%. The company expects to spend $2 billion on land and development compared with $1.4 billion in 2020.
The company has solid prospects, as is evident from the Zacks Consensus Estimate for fourth-quarter earnings of $2.13 per share, which indicates 195.8% year-over-year growth. Meanwhile, earnings estimates for 2021 and 2022 indicate 171.8% and 39.2% year-over-year growth, respectively. TMHC’s earnings surpassed analysts’ expectations in 19 of the trailing 22 quarters.
This luxury homebuilder has an impressive VGM Score of A, supported by a Value Score of A. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics.
A Brief Overview of the Other Stocks
D.R. Horton currently carries a Zacks Rank #3. This Texas-based prime homebuilder continues to gain from industry-leading market share, solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.
D.R. Horton’s earnings are expected to rise 24.7% year over year in fiscal 2022.
Lennar, which currently carries a Zacks Rank #2 (Buy), is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn is resulting in higher operating leverage.
Lennar’s earnings for fiscal 2021 and 2022 are expected to rise 78.5% and 7.1% year over year, respectively.
Toll Brothers currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening the product lines, price points and geographies.
Toll Brothers’ earnings for fiscal 2022 are expected to rise 33.2% year over year.