Tri Pointe Homes (TPH)

Homebuilder Tri Pointe Homes (NYSE:TPH) reported Q3 CY2025 results topping the market’s revenue expectations, but sales fell by 26.9% year on year to $836.9 million. Its GAAP profit of $0.64 per share was 23.1% above analysts’ consensus estimates.

Company Overview

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.

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.

Tri Pointe Homes’ main competitors include Lennar Corporation (NYSE:LEN), D.R. Horton (NYSE:DHI), PulteGroup (NYSE:PHM), and Toll Brothers (NYSE:TOL).

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Unfortunately, Tri Pointe Homes’s 2.3% annualized revenue growth over the last five years was sluggish. This fell short of our benchmarks and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Tri Pointe Homes’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.1% annually.

Tri Pointe Homes also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Tri Pointe Homes’s backlog reached $1.01 billion in the latest quarter and averaged 11.2% year-on-year declines over the last two years. Because this number is lower than its revenue growth, we can see the company hasn’t secured enough new orders to maintain its growth rate in the future.

This quarter, Tri Pointe Homes’s revenue fell by 26.9% year on year to $836.9 million but beat Wall Street’s estimates by 12.6%.

Looking ahead, sell-side analysts expect revenue to decline by 8.3% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.

Tri Pointe Homes has bad unit economics for an industrials company, giving it less room to reinvest and develop new offerings. As you can see below, it averaged a 24.5% gross margin over the last five years. Said differently, Tri Pointe Homes had to pay a chunky $75.53 to its suppliers for every $100 in revenue.

In Q3, Tri Pointe Homes produced a 20.4% gross profit margin, marking a 2.9 percentage point decrease from 23.3% in the same quarter last year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Tri Pointe Homes has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 14.1%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Tri Pointe Homes’s operating margin decreased by 4.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Tri Pointe Homes generated an operating margin profit margin of 7.7%, down 5 percentage points year on year. Since Tri Pointe Homes’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Tri Pointe Homes’s EPS grew at a decent 9.8% compounded annual growth rate over the last five years, higher than its 2.3% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its operating margin didn’t improve.

We can take a deeper look into Tri Pointe Homes’s earnings to better understand the drivers of its performance. A five-year view shows that Tri Pointe Homes has repurchased its stock, shrinking its share count by 32.4%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Tri Pointe Homes, its two-year annual EPS declines of 8.9% mark a reversal from its five-year trend. We hope Tri Pointe Homes can return to earnings growth in the future.

In Q3, Tri Pointe Homes reported EPS of $0.64, down from $1.18 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Tri Pointe Homes’s full-year EPS of $3.38 to shrink by 25%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Tri Pointe Homes has shown impressive cash profitability, enabling it to ride out cyclical downturns more easily while maintaining its investments in new and existing offerings. The company’s free cash flow margin averaged 9.1% over the last five years, better than the broader industrials sector.

Taking a step back, we can see that Tri Pointe Homes’s margin dropped by 3.8 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Tri Pointe Homes hasn’t been the highest-quality company lately because of its poor top-line performance, it historically found a few growth initiatives that worked. Its five-year average ROIC was 13%, higher than most industrials businesses.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Tri Pointe Homes’s ROIC averaged 4.4 percentage point decreases each year. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Tri Pointe Homes reported $792 million of cash and $1.11 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $584.9 million of EBITDA over the last 12 months, we view Tri Pointe Homes’s 0.5× net-debt-to-EBITDA ratio as safe. We also see its $0 of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Tri Pointe Homes blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its backlog missed. Overall, this print had some key positives. The stock traded up 5.3% to $34.61 immediately following the results.

Updated: November 25, 2025 at 11:20 PM EST

When considering an investment in Tri Pointe Homes, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

We see the value of companies helping their customers, but in the case of Tri Pointe Homes, we’re out. To kick things off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its strong operating margins show it’s a well-run business, the downside is its projected EPS for the next year is lacking. On top of that, its backlog declined.

Tri Pointe Homes’s P/E ratio based on the next 12 months is 14x. At this valuation, there’s a lot of good news priced in - you can find more timely opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $38.80 on the company (compared to the current share price of $33.85).