One-glance verdict
Undervalued
$94.19 our estimate vs market $72.45
Wall Street consensus: $66.75 (-29.1% lower than our fair-value estimate)
23% below our estimate, below the bear case
Fundamentals snapshot
Taylor Morrison Home Corp
TMHC · NYQ · Consumer Cyclical · Residential Construction
Current price
$72.45
52-week range
$54.15 - $72.50
Market cap
$6.67B
Balance sheet
Healthy
64.23x Strong cushion
Net debt $1.76B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 11.1% on equity, ahead of 60% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Forward P/E (11.3x) is higher than trailing (10.8x) - earnings are expected to drop.
- Risk Operating margin compressed from 17.6% to 11.1% over 3 years.
What this company does
Taylor Morrison Home Corp
Taylor Morrison is a homebuilder that designs and sells new houses and planned communities across the United States, serving a range of customers from first-time buyers to those looking for a resort lifestyle. The company makes most of its money from selling these homes, but also earns profits by offering related financial services like mortgages and title insurance (a policy that protects homeowners from disputes over who legally owns the property). This means its business performance is closely linked to the overall health of the housing market and interest rates, which affect how many people can afford to buy a new home.
How the company got here
Taylor Morrison's story is one of combining forces and growing to become a major player in the U.S. homebuilding industry. The current company was formed in 2007 when two builders, Taylor Woodrow and Morrison Homes, merged their U.S. operations. This combination created a stronger platform, and the company went public in 2013, meaning its shares became available for anyone to buy on the stock market. A key growth spurt happened in 2018 with the purchase of AV Homes, which expanded its presence in communities designed for active adults. Through these and other acquisitions, Taylor Morrison has grown into one of the largest homebuilders in the country.
What it actually does
Think of Taylor Morrison as a one-stop shop for building and buying a new home. They buy large areas of land and develop them into communities with everything from roads to utilities. Then, they design and construct a variety of homes, from smaller houses for first-time buyers to larger ones for growing families and even resort-style homes for those seeking a specific lifestyle. To make the buying process smoother, they also offer financial services like helping customers get a mortgage (a loan to buy a house) and handling the final closing paperwork.
Homebuilding
This is the company's main business, making up the vast majority of its revenue (the total money it brings in). Taylor Morrison builds and sells a wide range of homes across different price points to appeal to various customers, including first-time buyers, families looking to 'move-up' to a larger home, and those interested in lifestyle communities. They operate under several brand names, with "Taylor Morrison" being the most common and "Esplanade" used for their communities that offer resort-like amenities. Customers can often personalize their homes by choosing floor plans, exterior designs, and interior finishes, sometimes even through an online design tool.
Financial Services
To support its homebuilding operations, Taylor Morrison has a financial services division that helps buyers secure the funding they need. This part of the business acts like a mortgage broker, originating home loans for customers purchasing a Taylor Morrison home. By offering these services in-house, the company can streamline the buying process for its customers and capture more of the value from each home sale. This segment also includes title insurance (protecting against ownership disputes) and closing services, making it a convenient option for buyers.
Build-to-Rent
A newer and smaller part of the company's business involves building entire communities of homes specifically for renting, under the brand name "Yardly". These communities often feature single-family homes with private backyards, offering a different option than traditional apartment living. This strategy allows Taylor Morrison to cater to people who prefer to rent but still want the feel of a single-family home. The company builds these communities and then sells them to other companies that manage the rental properties long-term.
What management is betting on now
Management is focused on disciplined growth in desirable markets where there is strong demand for new housing. A key priority is expanding their 'community count' (the number of neighborhoods they are actively building and selling in), especially for their Esplanade brand of resort-style communities. They are also concentrating on offering a diverse range of homes to attract different types of buyers, from entry-level to luxury. Additionally, the company is investing in its build-to-rent business, seeing it as a way to serve a wider range of housing needs.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $94.19 vs current price $72.45
Wall Street consensus is the average analyst price target: $66.75 (-29.1% lower than our fair-value estimate).
Our most-likely fair value is $94.19 a share — about 30.0% above today's price of $72.45, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $1.8B. Interest coverage 64.2x.
Net debt
$1.76B
Interest coverage
64.23x
Taylor Morrison Home Corp's profit covers its interest bill about 64.2 times over. which is stronger than most peers shown here.
Healthy
Worse cushion
Baseline
Better cushion
TMHC
BASELINE
Taylor Morrison Home Corp
Total debt $2.41B Interest coverage 64.23x This is the baseline the peer rows are being compared against.
Total debt $1.00B Interest coverage 246.32x +283% vs TMHC Carries about 3.8x more debt cushion than TMHC.
Total debt $2.00B Interest coverage 71.11x +11% vs TMHC Has roughly the same debt cushion as TMHC.
Total debt $123.17M Interest coverage 33.36x -48% vs TMHC Carries about 1.9x less debt cushion than TMHC.
What you should know
The case for and against TMHC
3 Rewards
3 Risks
Rewards
-
Returns 11.1% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 4/10 years.
-
Trades at 10.8x P/E vs peer median 12.9x (16.1% cheaper).
Risks
-
Forward P/E (11.3x) is higher than trailing (10.8x) - earnings are expected to drop.
-
Operating margin compressed from 17.6% to 11.1% over 3 years.
-
Insider ownership is only 0.8% (peer median: 2.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
10.80x
Forward P/E
11.31x
P/B
1.10x
P/S
0.88x
EV/EBITDA
8.09x
PEG ratio
1.41x
Profitability
How much profit each dollar creates
Gross margin
22.6%
Operating margin
11.1%
Net margin
8.8%
ROE
11.1%
ROA
6.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.39x
Current ratio
9.26x
Quick ratio
1.04x
Total debt
$2.41B
Total cash
$652.93M
Growth
How the business has been compounding
Revenue TTM
$7.61B
Revenue 5Y CAGR
-0.4%
EPS TTM
6.71
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$817.35M
Free CF TTM
$776.97M
FCF margin
10.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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