Homebuilder Taylor Morrison Home (NYSE:TMHC) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 10.9% year on year to $2.1 billion. Its non-GAAP profit of $1.91 per share was 10% above analysts’ consensus estimates.
Is now the time to buy TMHC? Find out in our full research report (it’s free for active Edge members).
Taylor Morrison Home (TMHC) Q4 CY2025 Highlights:
- Revenue: $2.1 billion vs analyst estimates of $1.96 billion (10.9% year-on-year decline, 7.2% beat)
- Adjusted EPS: $1.91 vs analyst estimates of $1.74 (10% beat)
- Adjusted EBITDA: $272 million vs analyst estimates of $248.9 million (13% margin, 9.3% beat)
- Operating Margin: 12.8%, down from 15.3% in the same quarter last year
- Backlog: $1.86 billion at quarter end, down 41.8% year on year
- Market Capitalization: $6.42 billion
StockStory’s Take
Taylor Morrison Home’s fourth quarter revenue and adjusted earnings both surpassed Wall Street expectations, despite a double-digit decline in sales year-on-year. Management attributed the quarter’s performance to resilient demand in its move-up and resort lifestyle communities, particularly the Esplanade brand, and disciplined cost management. CEO Sheryl Palmer noted, “Our diverse operating model and broad consumer reach helped us navigate market headwinds,” while also highlighting a shift in buyer preferences and the company’s ability to maintain steady absorption rates despite industry challenges.
Looking ahead, Taylor Morrison Home’s guidance is shaped by an expected rebound in to-be-built home sales, new community openings, and a continued emphasis on higher-margin buyer segments. Management believes that growth in the Esplanade and move-up segments, along with operational efficiencies and digital tools, will support margin stabilization after a near-term dip. CFO Curt VanHyfte cautioned that short-term gross margins will remain pressured by spec home inventory, but stated, “We expect gross margins to improve gradually throughout the year as our sales mix shifts.”
Key Insights from Management’s Remarks
Management focused on a mix shift toward higher-margin buyer segments and enhancements in operational flexibility, while also acknowledging ongoing inventory and pricing pressures.
- Esplanade segment outperformed: Taylor Morrison Home’s resort lifestyle Esplanade communities saw 7% year-over-year net order growth, standing out as a bright spot amid softer conditions elsewhere. Management cited deep interest lists and strong brand differentiation as key drivers.
- Inventory management pressures margins: A higher mix of spec home closings, particularly in entry-level and tertiary markets, weighed on gross margins for the quarter. Management is prioritizing the sale of unsold homes but expects this to temporarily impact profitability in the first half of the year.
- Move-up and resort focus: The company is intentionally shifting incremental land investment toward core markets and higher-margin move-up and resort lifestyle buyers, reducing exposure to price-sensitive entry-level segments. Management believes this will support long-term returns and margin improvement.
- Cycle time improvements: Taylor Morrison Home has achieved a five-week year-over-year reduction in construction cycle times, enhancing its ability to adjust production to market demand and improve inventory turnover.
- Digital and AI investments: The rollout of proprietary AI-enabled sales, purchasing, and customer service tools is streamlining operations and supporting cost discipline. Management sees these efforts as critical to maintaining competitive advantage and operational efficiency.
Drivers of Future Performance
Taylor Morrison Home expects near-term margin headwinds as its inventory mix evolves, with a gradual recovery driven by new community launches and a focus on higher-value buyers.
- Sales mix shift to to-be-built homes: Management expects to-be-built homes to represent a larger share of future sales, especially as new communities open and buyer preferences shift toward customization. This mix shift is expected to gradually improve margins after a first-quarter low.
- Land and community strategy: The company is reducing land investment in non-core, price-sensitive markets and reallocating capital to move-up and resort lifestyle segments. Management believes this approach will improve long-term profitability and reduce exposure to costly incentives.
- Spec inventory clearance: The focus for early 2026 remains on selling down existing spec home inventory, which will temporarily weigh on gross margins. As inventory normalizes and demand stabilizes, incentives are expected to moderate, supporting margin recovery.
Catalysts in Upcoming Quarters
In the coming quarters, our analyst team will be watching (1) the pace at which Taylor Morrison Home shifts its sales mix toward to-be-built homes and higher-margin buyer segments, (2) the effectiveness of new community openings—especially in the Esplanade brand—at driving order growth, and (3) the company’s ability to manage and sell down spec inventory without further eroding margins. Progress in AI-driven operational enhancements and digital sales tools will also be key indicators of future competitiveness.
Taylor Morrison Home currently trades at $65.70, down from $66.41 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
High Quality Stocks for All Market Conditions
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.