Advertisement
Australia markets closed
  • ALL ORDS

    7,957.80
    +32.60 (+0.41%)
     
  • AUD/USD

    0.6516
    -0.0044 (-0.67%)
     
  • ASX 200

    7,703.20
    +27.40 (+0.36%)
     
  • OIL

    82.69
    -0.03 (-0.04%)
     
  • GOLD

    2,158.20
    -6.10 (-0.28%)
     
  • Bitcoin AUD

    96,129.01
    -8,779.51 (-8.37%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     

Investing in Taylor Morrison Home (NYSE:TMHC) three years ago would have delivered you a 102% gain

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But if you buy shares in a really great company, you can more than double your money. For example, the Taylor Morrison Home Corporation (NYSE:TMHC) share price has soared 102% in the last three years. How nice for those who held the stock! In more good news, the share price has risen 20% in thirty days.

So let's assess the underlying fundamentals over the last 3 years and see if they've moved in lock-step with shareholder returns.

Check out our latest analysis for Taylor Morrison Home

To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

ADVERTISEMENT

During three years of share price growth, Taylor Morrison Home achieved compound earnings per share growth of 23% per year. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 26% average annual increase in the share price. This observation indicates that the market's attitude to the business hasn't changed all that much. Quite to the contrary, the share price has arguably reflected the EPS growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

We know that Taylor Morrison Home has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

A Different Perspective

Taylor Morrison Home provided a TSR of 27% over the year. That's fairly close to the broader market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 10% per year. It is possible that management foresight will bring growth well into the future, even if the share price slows down. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. For example, we've discovered 1 warning sign for Taylor Morrison Home that you should be aware of before investing here.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.