Taylor Morrison Home Corporation Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Taylor Morrison Home Corporation (NYSE:TMHC) just released its latest third-quarter results and things are looking bullish. It was a solid earnings report, with revenues and statutory earnings per share (EPS) both coming in strong. Revenues were 14% higher than the analysts had forecast, at US$1.7b, while EPS were US$0.87 beating analyst models by 42%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Taylor Morrison Home after the latest results.
See our latest analysis for Taylor Morrison Home
Taking into account the latest results, the most recent consensus for Taylor Morrison Home from five analysts is for revenues of US$7.43b in 2021 which, if met, would be a major 23% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 131% to US$3.86. In the lead-up to this report, the analysts had been modelling revenues of US$6.97b and earnings per share (EPS) of US$3.64 in 2021. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$32.38, suggesting that the forecast performance does not have a long term impact on the company's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Taylor Morrison Home, with the most bullish analyst valuing it at US$37.00 and the most bearish at US$27.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Taylor Morrison Home shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Taylor Morrison Home's past performance and to peers in the same industry. It's clear from the latest estimates that Taylor Morrison Home's rate of growth is expected to accelerate meaningfully, with the forecast 23% revenue growth noticeably faster than its historical growth of 13%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.4% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Taylor Morrison Home to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Taylor Morrison Home's earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at US$32.38, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Taylor Morrison Home going out to 2021, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Taylor Morrison Home (of which 1 is a bit unpleasant!) you should know about.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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