Taylor Morrison (TMHC) Q4 Earnings & Revenues Beat Estimates

Taylor Morrison Home Corporation (NYSE:TMHC) reported fourth-quarter 2019 results, with earnings and revenues surpassing the Zacks Consensus Estimate. The top and the bottom line also grew year over year, buoyed by solid organic growth across the business. Following the results, the company’s shares increased 2.6% on Feb 5.

Adjusted earnings of $1.06 per share beat the Zacks Consensus Estimate of 98 cents by 8.16%. The figure rose from the year-ago quarter’s earnings per share (EPS) of 89 cents by 19.1%. The company’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters.

Sales & Operating Highlights

Net sales of $1466.4 million beat the consensus mark of $1459 million by 0.5%. The said figure also inched up 0.6% from the prior-year quarter’s figure of $1457.8 million. Strong sales across all geographies and consumer groups led by entry-level, first move-up and second move-up drove the company’s top line. Also, improvement in unemployment rate added to the upside.

Adjusted home closings gross margin, as a percentage of home closings revenues, increased 20 basis points (bps) year over year to 17.9% during the fourth quarter.

However, Adjusted EBITDA, as a percentage of total revenues, remained flat at 11.3% year over year.

Taylor Morrison Home Corporation Price, Consensus and EPS Surprise

Net Sales Order

Sales order in the fourth quarter of 2019 amounted to $1,158.5 million (2,552 units, up 42.3% year over year), increasing 43.7% from the prior-year quarter’s figure. Notably, this represented a sales pace per community of 2.6 for the quarter. Increased traffic and sales activity along with solid pricing in some of the sub-markets contributed to the upside. Average selling price for the quarter increased 0.9% to $0.454 million compared with $ 0.45 million reported in the year ago period.

Sales Order Backlog

As of Dec 31, 2019, the company reported $2,274.9 million (4,711 units) in backlog, up 9.4% (13.3%) year over year.

Average selling price declined 3.4% to $0.483 million compared with $0.50 million reported in the year-ago period.

Financials

As of Dec 31, 2019, Taylor Morrison had cash and cash equivalents of $326.4 million compared with $329.6 million a year ago.

Total Selling, General & Administrative Expenses (SG&A) amounted to $142.5 million compared to $129.3 million in the year-ago period.

2019 Highlights

In 2019, total revenues amounted to $4.76 billion, up 12.6% year over year.

Adjusted EPS for the year ended Dec 31, 2019 was reported at $2.98 compared with $2.69 in 2018.

Adjusted Home Closings Gross Margin declined 10 basis points to 18.2% compared with 18.3% reported a year ago.

Q1 Outlook

Average active community count is expected in the range of 320-330 units. Home closings are expected between 2,100 and 2,200 units.

SG&A, as a percentage of home closings revenues, is expected to be in the mid 11% range.

Effective tax rate is expected at approximately 23.5%.

Zacks Rank and Key Picks

Currently, Taylor Morrison carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same space include KB Home (NYSE:KBH) , M.D.C. Holdings, Inc. (NYSE:MDC) and PulteGroup, Inc. (NYSE:PHM) , each sporting a Zacks Rank #1.

KB Home has three-five year expected EPS growth rate of 10.9%.

M.D.C. Holdings has trailing four-quarter positive earnings surprise of 6%. The company’s earnings beat estimates in three of the last four quarters.

PulteGroup 2020 earnings are expected to rise 10%.

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