As the Q4 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the home builders industry, including Taylor Morrison Home (NYSE:TMHC) and its peers.
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 slower Q4. As a group, revenues beat analysts’ consensus estimates by 1.2%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 18.1% since the latest 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 $2.36 billion, up 16.7% year on year. This print exceeded analysts’ expectations by 9.5%. Overall, it was a strong quarter for the company with a solid beat of analysts’ adjusted operating income estimates and an impressive beat of analysts’ EPS estimates.
"I am proud to share the strong results of our fourth quarter, which I believe once again distinguished our team's execution and the merits of our diversified consumer and geographic strategy. With strong closings growth, higher margins and cost discipline, we produced a nearly-30% year-over-year increase in our adjusted earnings per diluted share and a 14% year-over-year increase in our book value per share to $56," said Sheryl Palmer, Taylor Morrison CEO and Chairman.
Taylor Morrison Home achieved the biggest analyst estimates beat of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 16.5% since reporting and currently trades at $52.02.
Is now the time to buy Taylor Morrison Home? Access our full analysis of the earnings results here, it’s free.
Best Q4: Champion Homes (NYSE:SKY)
Founded in 1951, Champion Homes (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.
Champion Homes reported revenues of $644.9 million, up 15.3% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a solid beat of analysts’ sales volume estimates and an impressive beat of analysts’ EPS estimates.
The stock is down 12.3% since reporting. It currently trades at $81.35.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free.
Weakest Q4: 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 $1.86 billion, down 4.6% year on year, falling short of analysts’ expectations by 2.9%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
As expected, the stock is down 26.2% since the results and currently trades at $90.
Read our full analysis of Toll Brothers’s results here.
NVR (NYSE:NVR)
Known for its unique land acquisition strategy, NVR (NYSE:NVR) is a respected homebuilder and mortgage company in the United States.
NVR reported revenues of $2.85 billion, up 17% year on year. This print topped analysts’ expectations by 2.3%. More broadly, it was a satisfactory quarter as it also produced an impressive beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.
NVR delivered the fastest revenue growth among its peers. The stock is down 20.4% since reporting and currently trades at $6,680.
Read our full, actionable report on NVR here, it’s free.
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 $1.25 billion, flat year on year. This number beat analysts’ expectations by 3.3%. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ backlog estimates.
The stock is down 20.4% since reporting and currently trades at $28.82.
Read our full, actionable report on Tri Pointe Homes here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Strong Momentum Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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