Investment Thesis
Taylor Morrison faces deteriorating operational fundamentals with revenue and net income declining YoY while burning cash operationally. The negative operating cash flow of -$10.4M and negative free cash flow of -$20.4M despite positive net income signal severe earnings quality issues. Even with a solid balance sheet, the company is destroying shareholder value through poor capital deployment and cash burn.
Strengths
- Manageable debt/equity ratio of 0.37x provides financial flexibility
- Strong cash position of $652.9M provides near-term liquidity buffer
- Reasonable gross margin of 21.0% maintains production profitability
Risks
- Operating cash flow negative at -$10.4M despite positive net income signals earnings quality deterioration
- Free cash flow negative at -$20.4M: company burning cash operationally and cannot fund operations from core business
- Revenue and net income both declining YoY (-0.6% and -10.8% respectively) indicate shrinking business
- Abysmal capital efficiency with ROE at 1.6% and ROA at 1.0% shows poor asset deployment
- FCF margin of -1.5% is unsustainable without either business improvement or balance sheet deterioration
Key Metrics to Watch
- Operating cash flow trend - must return to positive territory
- Free cash flow trajectory - critical for long-term viability
- Revenue growth stabilization
- Return on equity and return on assets improvement
Financial Metrics
Revenue
1.4B
Net Income
98.6M
EPS (Diluted)
$1.01
Free Cash Flow
-20.4M
Total Assets
9.8B
Cash
652.9M
Profitability Ratios
Gross Margin
21.0%
Operating Margin
73.8%
Net Margin
7.1%
ROE
1.6%
ROA
1.0%
FCF Margin
-1.5%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
0.37x
Debt/Assets
36.1%
Interest Coverage
N/A
Long-term Debt
2.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-29T14:24:20.033428 |
Data as of: 2026-03-31 |
Powered by Claude AI