Taylor Morrison Home (NYSE: TMHC) and D. R. Horton (NYSE:DHI) are both mid-cap cyclical consumer goods & services companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitability, analyst recommendations and earnings.
This table compares Taylor Morrison Home and D. R. Horton’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Taylor Morrison Home||2.41%||4.18%||2.21%|
|D. R. Horton||7.37%||14.13%||8.69%|
This is a summary of recent ratings and target prices for Taylor Morrison Home and D. R. Horton, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Taylor Morrison Home||0||3||4||0||2.57|
|D. R. Horton||0||8||8||0||2.50|
Taylor Morrison Home presently has a consensus price target of $27.80, suggesting a potential downside of 2.15%. D. R. Horton has a consensus price target of $47.80, suggesting a potential downside of 8.15%. Given Taylor Morrison Home’s stronger consensus rating and higher possible upside, research analysts plainly believe Taylor Morrison Home is more favorable than D. R. Horton.
Valuation & Earnings
This table compares Taylor Morrison Home and D. R. Horton’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Taylor Morrison Home||$3.55 billion||0.96||$52.61 million||$0.62||45.82|
|D. R. Horton||$14.09 billion||1.39||$1.04 billion||$2.74||18.99|
D. R. Horton has higher revenue and earnings than Taylor Morrison Home. D. R. Horton is trading at a lower price-to-earnings ratio than Taylor Morrison Home, indicating that it is currently the more affordable of the two stocks.
D. R. Horton pays an annual dividend of $0.50 per share and has a dividend yield of 1.0%. Taylor Morrison Home does not pay a dividend. D. R. Horton pays out 18.2% of its earnings in the form of a dividend. Taylor Morrison Home has raised its dividend for 6 consecutive years.
Risk and Volatility
Taylor Morrison Home has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500. Comparatively, D. R. Horton has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.
Insider & Institutional Ownership
59.1% of Taylor Morrison Home shares are held by institutional investors. Comparatively, 83.9% of D. R. Horton shares are held by institutional investors. 2.4% of Taylor Morrison Home shares are held by insiders. Comparatively, 6.7% of D. R. Horton shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
D. R. Horton beats Taylor Morrison Home on 11 of the 17 factors compared between the two stocks.
Taylor Morrison Home Company Profile
Taylor Morrison Home Corporation is a homebuilder, which designs, builds and sells single-family detached and attached homes. The Company is also a land developer, with a portfolio of lifestyle and master-planned communities. Its segments include East, which includes Atlanta, Charlotte, North Florida, Raleigh, Southwest Florida and Tampa; Central, which includes Austin, Dallas, and Houston (each of the Dallas and Houston markets include both a Taylor Morrison division and a Darling Homes division); West, which includes Bay Area, Chicago, Denver, Phoenix, Sacramento and Southern California, and Mortgage Operations, which includes Taylor Morrison Home Funding, LLC (TMHF) and Inspired Title Services, LLC (Inspired Title). It operates under the Taylor Morrison and Darling Homes brand names. The Company also provides financial services to customers through its mortgage subsidiary, TMHF, and title insurance and closing settlement services through its title company, Inspired Title.
D. R. Horton Company Profile
D.R. Horton, Inc. is a homebuilding company. The Company constructed and sold homes in 27 states and 79 markets, as of September 30, 2015. The Company’s segments include its 39 homebuilding divisions, its financial services operations and its other business activities. In the homebuilding segment, the Company builds and sells single-family detached homes and attached homes, such as town homes, duplexes, triplexes and condominiums. The Company’s 39 homebuilding divisions are aggregated into six segments: East Region, South Central Region, Midwest Region, West Region, Southwest Region and Southeast Region. In the financial services segment, the Company sells mortgages and collects fees for title insurance agency and closing services. The Company has subsidiaries that conduct insurance-related operations; construct and own income-producing rental properties; own non-residential real estate, including ranch land and improvements, and own and operate oil and gas-related assets.
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