Send me real-time posts from this site at my email
Motley Fool

Why Taylor Morrison Stock Just Jumped 9%

What happened

Shares of Taylor Morrison Home (NYSE: TMHC) jumped 9.4% as of 11:20 a.m. EDT today, after the Scottsdale, Arizona-based homebuilder beat earnings expectations in its third-quarter report released this morning.

Expected by analysts to earn $1.20 per share on sales of $1.75 billion, Taylor Morrison reported instead a $1.34 per-share profit on sales of $1.86 billion.

Image source: Getty Images.

So what

Taylor Morrison reported 3,327 sales in Q3 2021, and at prices 13% better per sale than it enjoyed a year ago, leading to 8% growth in revenue. The company also earned a "significantly better-than-anticipated" gross margin of 21.2%, helping it to grow bottom-line net profits 54% year over year.

And this good news looks likely to get even better as the year rolls into its final quarter. Management booked 3,372 net new orders for houses in Q3, more than replacing its inventory of homes sold in the quarter and implying further growth. The price at which the new homes will be sold, too, is on the rise, with the average sales order price up 31% to $641,000.

The total backlog of work to be done increased 32%, and Taylor Morrison now has 10,273 orders still to be built.

Now what

With a stock valued at $3.5 billion and net debt of $2.9 billion, Taylor Morrison can perhaps best be viewed as an "enterprise" valued at $6.4 billion. Relative to the stock's $485 million in trailing profits, that works out to a debt-adjusted P/E ratio of about 13.2 -- not at all a bad price for a company that just turned in 54% profit growth.

The big question for investors, of course, is how much longer Taylor Morrison can keep the growth going. But with analysts polled by S&P Global Market Intelligence forecasting 2023 earnings 40% above what Taylor Morrison is expected to earn this year, I'd say this stock still has plenty of gas left in the tank.

10 stocks we like better than Taylor Morrison Home
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Taylor Morrison Home wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2021

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue