Introducing Taylor Morrison Home (NYSE:TMHC), A Stock That Climbed 38% In The Last Three Years

Vanguard founder Jack Bogle helped spearhead the low-cost index fund, putting average returns within reach of every investor. But if you pick the right individual stocks, you could make more than that. For example, the Taylor Morrison Home Corporation (NYSE:TMHC) share price is up 38% in the last three years, slightly above the market return. In contrast, the stock is actually down 7.6% in the last year, suggesting a lack of positive momentum.

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View our latest analysis for Taylor Morrison Home

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Taylor Morrison Home was able to grow its EPS at 14% per year over three years, sending the share price higher. This EPS growth is higher than the 11% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock. This cautious sentiment is reflected in its (fairly low) P/E ratio of 10.92.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Taylor Morrison Home has improved its bottom line lately, but is it going to grow revenue? Check if analysts think Taylor Morrison Home will grow revenue in the future.

A Different Perspective

While the broader market gained around 3.8% in the last year, Taylor Morrison Home shareholders lost 7.6%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 0.7% per year over five years. We realise that Buffett has said investors should 'buy when there is blood on the streets', but we caution that investors should first be sure they are buying a high quality businesses. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.