Toll Brothers (TOL) vs. Taylor Morrison Home (TMHC) Head to Head Analysis

Toll Brothers (NYSE: TOL) and Taylor Morrison Home (NYSE:TMHC) are both mid-cap cyclical consumer goods & services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Profitability

This table compares Toll Brothers and Taylor Morrison Home’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Toll Brothers 9.21% 12.00% 5.50%
Taylor Morrison Home 2.41% 4.18% 2.21%

Analyst Recommendations

This is a breakdown of recent ratings for Toll Brothers and Taylor Morrison Home, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Toll Brothers 1 6 10 0 2.53
Taylor Morrison Home 0 4 4 0 2.50

Toll Brothers currently has a consensus price target of $48.57, suggesting a potential downside of 5.83%. Taylor Morrison Home has a consensus price target of $27.67, suggesting a potential downside of 0.30%. Given Taylor Morrison Home’s higher probable upside, analysts clearly believe Taylor Morrison Home is more favorable than Toll Brothers.

Dividends

Toll Brothers pays an annual dividend of $0.32 per share and has a dividend yield of 0.6%. Taylor Morrison Home does not pay a dividend. Toll Brothers pays out 10.1% of its earnings in the form of a dividend.

Institutional & Insider Ownership

88.1% of Toll Brothers shares are owned by institutional investors. Comparatively, 59.1% of Taylor Morrison Home shares are owned by institutional investors. 8.8% of Toll Brothers shares are owned by company insiders. Comparatively, 2.4% of Taylor Morrison Home shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk & Volatility

Toll Brothers has a beta of 1.57, meaning that its stock price is 57% more volatile than the S&P 500. Comparatively, Taylor Morrison Home has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.

Earnings & Valuation

This table compares Toll Brothers and Taylor Morrison Home’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Toll Brothers $5.82 billion 1.36 $535.49 million $3.18 16.22
Taylor Morrison Home $3.55 billion 0.93 $52.61 million $0.62 44.76

Toll Brothers has higher revenue and earnings than Taylor Morrison Home. Toll Brothers 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.

Summary

Toll Brothers beats Taylor Morrison Home on 13 of the 16 factors compared between the two stocks.

About Toll Brothers

Toll Brothers, Inc. is engaged in designing, building, marketing, selling and arranging financing for detached and attached homes in luxury residential communities. The Company operates through two segments: Traditional Home Building and Toll Brothers City Living (City Living). Within the Traditional Home Building segment, it operates in five geographic segments in the United States: the North, consisting of Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York; the Mid-Atlantic, consisting of Delaware, Maryland, Pennsylvania and Virginia; the South, consisting of Florida, North Carolina and Texas; the West, consisting of Arizona, Colorado, Nevada and Washington, and California. City Living is the Company’s urban development division. Its products include Traditional Home Building Product and City Living Product. Its Traditional Home Building Product includes detached homes, move-up, executive, estate, and active-adult and age-qualified lines of home.

About Taylor Morrison Home

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.

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