Investors Don't See Light At End Of Taylor Morrison Home Corporation's (NYSE:TMHC) Tunnel
Investors Don't See Light At End Of Taylor Morrison Home Corporation's (NYSE:TMHC) Tunnel
Taylor Morrison Home Corporation's (NYSE:TMHC) price-to-earnings (or "P/E") ratio of 7.5x might make it look like a strong buy right now compared to the market in the United States, where around half of the companies have P/E ratios above 17x and even P/E's above 32x are quite common. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so limited.
With earnings that are retreating more than the market's of late, Taylor Morrison Home has been very sluggish. It seems that many are expecting the dismal earnings performance to persist, which has repressed the P/E. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. Or at the very least, you'd be hoping the earnings slide doesn't get any worse if your plan is to pick up some stock while it's out of favour.
Want the full picture on analyst estimates for the company? Then our free report on Taylor Morrison Home will help you uncover what's on the horizon.What Are Growth Metrics Telling Us About The Low P/E?
There's an inherent assumption that a company should far underperform the market for P/E ratios like Taylor Morrison Home's to be considered reasonable.
If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 23%. Even so, admirably EPS has lifted 281% in aggregate from three years ago, notwithstanding the last 12 months. Accordingly, while they would have preferred to keep the run going, shareholders would probably welcome the medium-term rates of earnings growth.
Shifting to the future, estimates from the four analysts covering the company suggest earnings growth is heading into negative territory, declining 0.5% per year over the next three years. With the market predicted to deliver 10% growth each year, that's a disappointing outcome.
With this information, we are not surprised that Taylor Morrison Home is trading at a P/E lower than the market. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. There's potential for the P/E to fall to even lower levels if the company doesn't improve its profitability.
The Key Takeaway
Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.
As we suspected, our examination of Taylor Morrison Home's analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E. At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio. It's hard to see the share price rising strongly in the near future under these circumstances.
Before you settle on your opinion, we've discovered 1 warning sign for Taylor Morrison Home that you should be aware of.
If P/E ratios interest you, you may wish to see this free collection of other companies with strong earnings growth and low P/E ratios.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
與美國市場相比,泰勒·莫里森家居公司(紐約證券交易所代碼:TMHC)7.5倍的市盈率(或 “市盈率”)可能使其目前看起來像是一個強勁的買盤,美國約有一半的公司的市盈率高於17倍,甚至市盈率高於32倍也很常見。但是,僅按面值計算市盈率是不明智的,因爲可以解釋爲什麼市盈率如此有限。
泰勒·莫里森房屋的收益下降幅度超過了最近的市場,因此一直非常疲軟。看來許多人預計慘淡的盈利表現將持續下去,這抑制了市盈率。如果你仍然喜歡該公司,在做出任何決定之前,你會希望其盈利軌跡得到扭轉。或者至少,如果你的計劃是在失寵的時候買入一些股票,你希望收益下滑不會變得更糟。
想全面了解分析師對公司的估計嗎?然後,我們關於泰勒·莫里森故居的免費報告將幫助您發現即將發生的事情。關於低市盈率,增長指標告訴我們什麼?
人們固有的假設是,如果像泰勒·莫里森家居這樣的市盈率才算合理,公司的表現應該遠遠低於市場。
如果我們回顧一下去年的收益,令人沮喪的是,該公司的利潤下降了23%。即便如此,儘管過去12個月,但每股收益仍比三年前增長了281%,令人欽佩。因此,儘管股東們本來希望保持盈利,但他們可能會對中期收益增長率表示歡迎。
展望未來,報道該公司的四位分析師的估計表明,收益增長將進入負值區間,未來三年每年下降0.5%。預計市場每年將實現10%的增長,這是一個令人失望的結果。
有了這些信息,泰勒·莫里森房屋的市盈率低於市場也就不足爲奇了。儘管如此,還不能保證市盈率已達到最低水平,收益反轉。如果公司不提高盈利能力,市盈率有可能降至更低的水平。
關鍵要點
僅使用市盈率來確定是否應該出售股票是不明智的,但它可以作爲公司未來前景的實用指南。
正如我們所懷疑的那樣,我們對泰勒·莫里森家居分析師預測的審查顯示,其收益萎縮的前景是其低市盈率的原因。在現階段,投資者認爲,收益改善的可能性不足以證明更高的市盈率是合理的。在這種情況下,很難看到股價在不久的將來強勁上漲。
在你確定自己的意見之前,我們已經發現了泰勒·莫里森家的一個警告標誌,你應該注意這個標誌。
如果你對市盈率感興趣,你可能希望看到這批盈利增長強勁、市盈率低的免費公司。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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