As the Q1 earnings season wraps, let’s dig into this quarter’s best and worst performers in the home builders industry, including Taylor Morrison Home (NYSE:TMHC) and its peers.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 10 home builders stocks we track reported a slower Q1. As a group, revenues were in line with analysts’ consensus estimates.
While some home builders stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.4% since the latest earnings results.
Best Q1: Taylor Morrison Home (NYSE:TMHC)
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $1.90 billion, up 11.5% year on year. This print exceeded analysts’ expectations by 5.7%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates.
"In the first quarter, we delivered 3,048 homes at an average price of $600,000, producing $1.8 billion of home closings revenue, up 12% year over year, with an adjusted home closings gross margin of 24.8%, up 80 basis points year over year. Combined with 70 basis points of SG&A leverage, our adjusted earnings per diluted share increased 25% while our book value per share grew 16% to approximately $58. Once again, each of our operational metrics met or exceeded our prior guidance. These strong top and bottom-line results reflect the benefits of our diversified consumer and product strategy. Especially in volatile market environments, this diversification is a valuable differentiator that we believe contributes to greater volume and margin resiliency," said Sheryl Palmer, Taylor Morrison CEO and Chairman.
Taylor Morrison Home achieved the biggest analyst estimates beat and fastest revenue growth of the whole group. The results were likely priced in, however, and the stock is flat since reporting. It currently trades at $59.33.
Is now the time to buy Taylor Morrison Home? Access our full analysis of the earnings results here, it’s free.
Tri Pointe Homes (NYSE:TPH)
Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.
Tri Pointe Homes reported revenues of $740.9 million, down 21.1% year on year, outperforming analysts’ expectations by 4%. The business had a strong quarter with a solid beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
The market seems content with the results as the stock is up 2.3% since reporting. It currently trades at $31.55.
Is now the time to buy Tri Pointe Homes? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: LGI Homes (NASDAQ:LGIH)
Based in Texas, LGI Homes (NASDAQ:LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
LGI Homes reported revenues of $351.4 million, down 10.1% year on year, falling short of analysts’ expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 5% since the results and currently trades at $56.25.
Read our full analysis of LGI Homes’s results here.
TopBuild (NYSE:BLD)
Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE:BLD) is a distributor and installer of insulation and other building products.
TopBuild reported revenues of $1.23 billion, down 3.6% year on year. This print was in line with analysts’ expectations. Taking a step back, it was a satisfactory quarter as it also produced a solid beat of analysts’ adjusted operating income estimates but full-year EBITDA guidance slightly missing analysts’ expectations.
The stock is up 1.2% since reporting and currently trades at $295.50.
Read our full, actionable report on TopBuild here, it’s free.
Meritage Homes (NYSE:MTH)
Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE:MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.
Meritage Homes reported revenues of $1.36 billion, down 7.5% year on year. This result beat analysts’ expectations by 2.4%. Zooming out, it was a mixed quarter as it also recorded full-year revenue guidance beating analysts’ expectations but a significant miss of analysts’ backlog estimates.
Meritage Homes pulled off the highest full-year guidance raise among its peers. The stock is flat since reporting and currently trades at $67.87.
Read our full, actionable report on Meritage Homes here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
Join Paid Stock Investor Research
Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here.