When Taylor Morrison Home Corporation (NYSE:TMHC) announced its most recent earnings (30 September 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Taylor Morrison Home has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see TMHC has performed.
How Well Did TMHC Perform?
TMHC's trailing twelve-month earnings (from 30 September 2019) of US$210m has declined by -4.1% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 38%, indicating the rate at which TMHC is growing has slowed down. Why could this be happening? Let's examine what's going on with margins and whether the rest of the industry is facing the same headwind.
In terms of returns from investment, Taylor Morrison Home has fallen short of achieving a 20% return on equity (ROE), recording 8.4% instead. Furthermore, its return on assets (ROA) of 3.9% is below the US Consumer Durables industry of 7.0%, indicating Taylor Morrison Home's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Taylor Morrison Home’s debt level, has declined over the past 3 years from 7.9% to 7.8%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research Taylor Morrison Home to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for TMHC’s future growth? Take a look at our free research report of analyst consensus for TMHC’s outlook.
- Financial Health: Are TMHC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
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