Investors in Taylor Morrison Home (NYSE:TMHC) have seen strong returns of 190% over the past five years

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. But on the bright side, if you buy shares in a high quality company at the right price, you can gain well over 100%. For example, the Taylor Morrison Home Corporation (NYSE:TMHC) share price has soared 190% in the last half decade. Most would be very happy with that. It's also up 8.9% in about a month. But this could be related to good market conditions -- stocks in its market are up 7.3% in the last month.

Let's take a look at the underlying fundamentals over the longer term, and see if they've been consistent with shareholders returns.

See our latest analysis for Taylor Morrison Home

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.

Over half a decade, Taylor Morrison Home managed to grow its earnings per share at 31% a year. This EPS growth is higher than the 24% average annual increase in the share price. So it seems the market isn't so enthusiastic about the stock these days. The reasonably low P/E ratio of 8.13 also suggests market apprehension.

You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

It is of course excellent to see how Taylor Morrison Home has grown profits over the years, but the future is more important for shareholders. If you are thinking of buying or selling Taylor Morrison Home stock, you should check out this FREE detailed report on its balance sheet.

A Different Perspective

We're pleased to report that Taylor Morrison Home shareholders have received a total shareholder return of 39% over one year. That gain is better than the annual TSR over five years, which is 24%. Therefore it seems like sentiment around the company has been positive lately. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. It's always interesting to track share price performance over the longer term. But to understand Taylor Morrison Home better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Taylor Morrison Home , and understanding them should be part of your investment process.

We will like Taylor Morrison Home better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.