Need To Know: Analysts Just Made A Substantial Cut To Their Taylor Morrison Home Corporation (NYSE:TMHC) Estimates

One thing we could say about the analysts on Taylor Morrison Home Corporation (NYSE:TMHC) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon. Shares are up 4.2% to US$26.24 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the latest downgrade, the eight analysts covering Taylor Morrison Home provided consensus estimates of US$6.3b revenue in 2023, which would reflect a substantial 23% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 39% to US$5.95 in the same period. Previously, the analysts had been modelling revenues of US$7.2b and earnings per share (EPS) of US$7.50 in 2023. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

Check out our latest analysis for Taylor Morrison Home

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It'll come as no surprise then, to learn that the analysts have cut their price target 9.1% to US$30.58. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Taylor Morrison Home at US$37.00 per share, while the most bearish prices it at US$25.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 19% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 17% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 0.4% annually for the foreseeable future. The forecasts do look bearish for Taylor Morrison Home, since they're expecting it to shrink faster than the industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Taylor Morrison Home. Unfortunately they also downgraded their revenue estimates, and our aggregation of analyst estimates suggests that Taylor Morrison Home revenue is expected to perform worse than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Taylor Morrison Home.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Taylor Morrison Home, including a weak balance sheet. For more information, you can click here to discover this and the 1 other concern we've identified.

We also provide an overview of the Taylor Morrison Home Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.

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