Let's dig into the relative performance of Taylor Morrison Home (NYSE:TMHC) and its peers as we unravel the now-completed Q1 home builders earnings season.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 12 home builders stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 3.8%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and home builders stocks have had a rough stretch, with share prices down 5.3% on average since the previous earnings results.
Taylor Morrison Home (NYSE:TMHC) Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $1.7 billion, up 2.3% year on year, exceeding analysts' expectations by 2.7%. Overall, it was an exceptional quarter for the company with an impressive beat of analysts' backlog sales estimates and a decent beat of analysts' earnings estimates.
"In the first quarter, our team delivered a strong start to the year, including better-than-expected sales activity, upside to our gross margin expectations, and efficient construction progress that we believe has set the stage for continued success through the remainder of the year. Supported by our diversified consumer and geographic strategy, we delivered 2,731 homes at a better-than-expected home closings gross margin of 24.0%, driving earnings per diluted share of $1.75 and 14% growth in our book value per share to $50. With consistent activity throughout the quarter, our net sales orders increased 29% year over year, driven by a monthly sales pace of 3.7 per community—putting us firmly on track to meet our annual sales pace goal in the low-three range," said Sheryl Palmer, Taylor Morrison Chairman and CEO.
The stock is down 4.5% since reporting and currently trades at $55.17.
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Best Q1: Tri Pointe Homes (NYSE:TPH) Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Tri Pointe Homes reported revenues of $939.4 million, up 20.5% year on year, outperforming analysts' expectations by 8.8%. It was a stunning quarter for the company with an impressive beat of analysts' earnings estimates and a solid beat of analysts' backlog sales estimates.
Tri Pointe Homes achieved the fastest revenue growth among its peers. The market seems content with the results as the stock is up 3.3% since reporting. It currently trades at $37.32.
Weakest Q1: Skyline Champion (NYSE:SKY) Founded in 1951, Skyline Champion (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.
Skyline Champion reported revenues of $536.4 million, up 9.1% year on year, falling short of analysts' expectations by 4.4%. It was a weak quarter for the company with a miss of analysts' earnings and volume estimates.
Skyline Champion posted the weakest performance against analyst estimates in the group. As expected, the stock is down 10.7% since the results and currently trades at $69.41.
TopBuild (NYSE:BLD) Established in 2015 following a spinoff from Masco Corporation (NYSE:MAS), TopBuild (NYSE:BLD) is a distributor and installer of insulation and other building products.
TopBuild reported revenues of $1.28 billion, up 1.1% year on year, falling short of analysts' expectations by 1.7%. Looking more broadly, it was a weak quarter for the company with a miss of analysts' organic revenue estimates.
The stock is down 6.4% since reporting and currently trades at $390.5.
Toll Brothers (NYSE:TOL) Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE:TOL) is a luxury homebuilder across the United States.
Toll Brothers reported revenues of $2.84 billion, up 13.2% year on year, surpassing analysts' expectations by 6.7%. Looking more broadly, it was an exceptional quarter for the company with a decent beat of analysts' earnings estimates.
The stock is down 12.9% since reporting and currently trades at $113.4.
This content was originally published on Stock Story
