Have you been paying attention to shares of
Taylor Morrison Home (? Shares have been on the move with the stock up 6.2% over the past month. The stock hit a new 52-week high of $46.48 in the previous session. Taylor Morrison Home has gained 52.5% since the start of the year compared to the 19.6% move for the Zacks Construction sector and the 37% return for the Zacks Building Products - Home Builders industry. TMHC Quick Quote TMHC - Free Report) What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 26, 2023, Taylor Morrison reported EPS of $1.74 versus consensus estimate of $1.29.
For the current fiscal year, Taylor Morrison is expected to post earnings of $6.71 per share on $6.98 billion in revenues. This represents a -28.24% change in EPS on a -15.18% change in revenues. For the next fiscal year, the company is expected to earn $6.98 per share on $7.47 billion in revenues. This represents a year-over-year change of 4.07% and 7.14%, respectively.
Taylor Morrison may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Taylor Morrison has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 6.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 9.2X. On a trailing cash flow basis, the stock currently trades at 4.5X versus its peer group's average of 5.6X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Taylor Morrison currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Taylor Morrison meets the list of requirements. Thus, it seems as though Taylor Morrison shares could have potential in the weeks and months to come.
How Does TMHC Stack Up to the Competition?
Shares of TMHC have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is
Tri Pointe Homes Inc. (. TPH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of B. TPH Quick Quote TPH - Free Report)
Earnings were strong last quarter. Tri Pointe Homes Inc. beat our consensus estimate by 73.81%, and for the current fiscal year, TPH is expected to post earnings of $3.07 per share on revenue of $3.4 billion.
Shares of Tri Pointe Homes Inc. have gained 9.6% over the past month, and currently trade at a forward P/E of 10.57X and a P/CF of 5.25X.
The Building Products - Home Builders industry is in the top 3% of all the industries we have in our universe, so it looks like there are some nice tailwinds for TMHC and TPH, even beyond their own solid fundamental situation.