While many U.S. homebuilders began to rebound a couple of
years ago along with the broader housing market, Taylor Morrison
Home was a little late to the party.
Taylor Morrison (
) builds single-family homes, condos, high-rise and
master-planned communities in the U.S. and Canada. A good chunk
of its business comes from Arizona, California and Florida --
markets that were among the hardest hit during the housing
Because some of the markets Taylor Morrison serves took so
long to recover -- including Phoenix, Southern California, Tampa
and Orlando, Fla. -- the company's own financial performance took
a while to rebound, too.
It wasn't until the fourth quarter of 2012 that Taylor
Morrison finally began to produce sustained revenue growth. It
took even longer for the company to get its earnings growth back
In contrast, leading publicly traded builders such asLennar (
),D.R. Horton (
) andNVR (
) have been producing robust financial gains since the first
quarter of 2012.
The good news for Taylor Morrison is that it is now firing on
all cylinders financially. The company has delivered five
straight quarters of 43%-or-better sales growth. Earnings have
risen at least 17% over the last three quarters.
Meanwhile, Taylor Morrison continues to raise its 2014
expectations amid growing optimism over several key markets.
In a recent report, Zacks Equity Research noted that Taylor
Morrison's full-year estimate rose three times over the span of
30 days, "and there has been no downward revision over the same
Part of the optimism over this year's growth potential centers
on Florida, where Taylor Morrison has a variety of new
communities coming to market.
One project -- the Overlook at Hamlin in the Orlando area --
recently opened with four product lines on Lake Hancock. Homes
will range from 1,600 to more than 5,100 square feet, with
planned prices that start around $250,000 and range to more than
Taylor Morrison bought property in the area in 2011, when
Orlando's housing market was still getting hammered by declining
home sales and prices.
"We purchased the initial 380-lot project when few builders in
the Orlando area were purchasing small draw positions," Chief
Executive Sheryl Palmer said on a Q4 conference call with
Early last year Taylor Morrison added another 260 lots to the
community. The Overlook at Hamlin opened for pre-sales in
December and had sold 30 units through January.
Palmer also voiced optimism about Florida's market for active
"We have seen a strong presence from this buyer group as the
season kicked off late last year," she said. "We built many
different types of communities and ... have dozens of others set
for this year that we believe will contribute to another
Meanwhile, Taylor Morrison's business should get an additional
boost from Texas, which weathered the housing crisis in
relatively good shape and is home to one of the nation's
strongest job and housing markets.
Taylor Morrison's operation in the Lone Star State includes
communities in the thriving Austin and Houston metro areas.
Following a homebuilding tour of Houston and Dallas earlier
this year, analyst Michael Rehaut of JPMorgan noted that "all of
the public and private builders we met with conveyed highly
favorable market outlooks for the upcoming year, with a leading
private developer describing the Houston market as 'full steam
Those outlooks were consistent with JPMorgan's Regional Market
Analysis, which "point to both Dallas and Houston as being two of
the strongest housing markets in the country from a fundamental
standpoint, featuring strong job growth, favorable
price-to-income ratios and low inventory levels."
Rehaut also noted that Houston's job growth over the last two
years, at 6.8%, clocked in at more than double the national
average of 3.2%. Austin's job growth over the same period was
also more than double the national average, at 6.6%.
On the Q4 conference call, CEO Palmer said "all of our Texas
markets performed well through the fourth quarter, with the
average selling price among some of the highest in our U.S.
market. We believe our positioning has created a unique
Strength in Texas helped Taylor Morrison deliver its best
performance in years during the fourth quarter. Earnings came in
at 72 cents a share, excluding special items. That was up from 1
cent the prior year, when the company was still privately held,
and above Wall Street estimates.
Total revenue climbed 43% to $798.4 billion, beating views.
Taylor Morrison also topped estimates on homebuilding revenue,
unit closings and homebuilding gross margin. The average closing
price rose 8.1% year-over-year, which was above views as
"Taylor Morrison's focus on move-up and luxury buyers appears
to be working, and we believe the company's pricing power is the
key reason for the gross margin beat," Sterne Agee analyst Jay
For 2014, Taylor Morrison expects its community count to
increase 25% to 30% and closings to climb 15% to 20%. Analysts
polled by Thomson Reuters look for 2014 EPS of $1.96, up 38% from
last year. Full-year profit is seen rising 15% in 2015.
Taylor Morrison's stock price trades near 25. The company's
shares, which went public last April, have risen about 29% since
the beginning of 2014.