TMHC
Taylor Morrison Home Corporation
$71.85
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 33.6% below fair value
You pay
$71.85
Bear
$80.97
Fair
$108.23
Bull
$135.48
Bear
$80.97
+12.7%
$7.77 × 14x + net cash
Fair
$108.23
+50.6%
$7.77 × 18x + net cash
Bull
$135.48
+88.6%
$7.77 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.77)
Implied Market Multiple
9.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $72.75 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $108.23 per share.
Warnings
Wall Street's average price target is $72.75 (from 31 analysts). Our estimate is 70% 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