Here's Why Investors Must Add Taylor Morrison Stock to Portfolio Now

Có thể bạn quan tâm

Taylor Morrison Home Corporation’s TMHC performance is benefiting from a steady mix of to-be-built and spec homes, strategic land investments and a balanced capital allocation approach to ensure shareholder value.

Bạn đang xem: Here’s Why Investors Must Add Taylor Morrison Stock to Portfolio Now

This Arizona-based homebuilder and land developer’s shares have gained 10.5% in the past six months, outperforming the Zacks Building Products – Home Builders industry and the Zacks Construction sector. Although TMHC’s price performance fell short of the S&P 500 index during the same time frame, the median price return of the former is more than the latter. The detailed price performance is shown in the chart below.

Zacks Investment Research

Image Source: Zacks Investment Research

The Zacks Consensus Estimate of the company’s 2025 earnings per share (EPS) has moved north to $9.32 from $8.91 in the past 60 days. The estimated value indicates 11.2% year-over-year growth. Also, during the same time frame, the earnings estimates for the first quarter of 2025 have moved up to $1.85 per share from $1.83, indicating 5.7% year-over-year growth. The company’s earnings have surpassed expectations in each of the trailing four quarters, the average surprise being 11.5%.

Headwinds in the form of still-high mortgage rates, economic uncertainties, and increased costs are hovering over the company. However, the optimism surrounding declining Fed interest rates, the increased employment scenario in the country, and the company-specific tailwinds mentioned above are supporting Taylor Morrison’s sales trends.

Let us discuss the factors why investors must consider this Zacks Rank #2 (Buy) stock for now.

To-Be-Built & Spec Home Mix: Taylor Morrison’s growth momentum is notably favored by a favorable mix of to-be-built and spec homes. Its diversified product portfolio aligns with the balanced mix, thus contributing to its growth. The resort lifestyle buyers and move-up buyers tend to mainly focus on to-be-built homes while the entry-level buyers focus on spec homes. This balanced approach of to-be-built and spec homes positions the company well to compete for sales against other homebuilders having more limited options.

During the first nine months of 2024, the company witnessed 12.3% year-over-year growth in home closings, with home closing revenues growing 7%. New orders, during the same time frame, grew 13.7% year over year to 9,627 units, with new order revenues growing 9.8% to $5.77 billion.

Strategic Land Investments: Taylor Morrison’s focus on land buyouts and development investments enables it to hold a strong portfolio in the long term, given the improving housing market conditions. In the first nine months of 2024, the company invested $1.8 billion in land investment, keeping it on track for a total investment value of $2.5 billion for 2024.

Xem thêm : 4 Cybersecurity Leaders to Add to Your Portfolio Before 2025 Kicks Off – December 16, 2024

As of the third quarter of 2024, the owned and controlled lot inventory was 83,579 homebuilding lots. Of this value, 58% was controlled via off-balance sheet structures, up from 53% at the end of 2023, putting TMHC on track to achieving its near-term goal of controlling at least 60-65% of its lot supply. Given the strong land pipeline and development timelines, the company expects its community count to continue expanding into 2025, ranging between 330 and 340 counts.

Ensuring Shareholder Value: The company pivots around efficient capital allocation strategies to fulfill its goal of delivering shareholder returns throughout a housing cycle. Furthermore, this enables Taylor Morrison to facilitate and maintain business diversification by evaluating various growth opportunities. Implementing such strategies positions it to capture long-term growth opportunities while navigating strong through this uncertain market.

On Oct. 23, 2024, the board of directors of the company authorized a renewal of its stock repurchase program through Dec. 31, 2026. Per the renewed program, it can repurchase up to $1 billion of its common stock. Notably, year-to-date as of Sept. 30, 2024, TMHC repurchased 4.2 million shares for a total valuation of $258 million.

Trading at a Discount: Taylor Morrison is currently trading at a discount compared with the industry peers on a forward 12-month price-to-earnings (P/E) ratio basis. The discounted valuation indicates that despite the recent stock price gain in the past six months, it remains an attractive option for investors looking for a suitable entry point.