TMHC
Taylor Morrison Home Corporation
$57.99
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 46.7% below fair value
You pay
$57.99
Bear
$81.39
Fair
$108.70
Bull
$136.02
Bear
$81.39
+40.3%
$7.77 × 14x + net cash
Fair
$108.70
+87.4%
$7.77 × 18x + net cash
Bull
$136.02
+134.6%
$7.77 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.77)
Implied Market Multiple
7.5x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $73.75 from 30 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $108.70 per share.
Warnings
Wall Street's average price target is $73.75 (from 30 analysts). Our estimate is 68% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing