Is Now The Time To Look At Buying Taylor Morrison Home Corporation (NYSE:TMHC)?
Taylor Morrison Home Corporation (NYSE:TMHC), might not be a large cap stock, but it saw a decent share price growth in the teens level on the NYSE over the last few months. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Taylor Morrison Home’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Taylor Morrison Home
What Is Taylor Morrison Home Worth?
According to my valuation model, Taylor Morrison Home seems to be fairly priced at around 1.68% above my intrinsic value, which means if you buy Taylor Morrison Home today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $43.01, then there isn’t really any room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Taylor Morrison Home’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Taylor Morrison Home look like?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -19% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Taylor Morrison Home. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Currently, TMHC appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on TMHC for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on TMHC should the price fluctuate below its true value.
So while earnings quality is important, it's equally important to consider the risks facing Taylor Morrison Home at this point in time. In terms of investment risks, we've identified 1 warning sign with Taylor Morrison Home, and understanding this should be part of your investment process.
If you are no longer interested in Taylor Morrison Home, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
