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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Taylor Morrison Home's annualized return on capital (ROC %) for the quarter that ended in Mar. 2026 was 5.15%.
As of today (2026-08-06), Taylor Morrison Home's WACC % is 8.33%. Taylor Morrison Home's ROC % is 8.78% (calculated using TTM income statement data).
Taylor Morrison Home generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Taylor Morrison Home (NYSE:TMHC) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Taylor Morrison Home's WACC % is 8.33%. Taylor Morrison Home's ROC % is 8.78% (calculated using TTM income statement data).
Taylor Morrison Home generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Taylor Morrison Home (TMHC) has a ROC % of 5.15% as of Mar. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Taylor Morrison Home and its competitors.
Is Taylor Morrison Home's ROC % too high?
Taylor Morrison Home's current ROC % is 5.15%. The Homebuilding & Construction industry median ROC % is 4.64. Taylor Morrison Home's value of 5.15% is 11% above this industry median. Overall, Taylor Morrison Home has a GF Score™ of 63/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Taylor Morrison Home's ROC % compare to IBP and MTH?
Taylor Morrison Home's ROC % of 5.15% can be compared against companies in the Homebuilding & Construction industry. The industry median ROC % is 4.64. Taylor Morrison Home's value of 5.15% is 11% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Homebuilding & Construction company?
The median ROC % among Homebuilding & Construction companies is 4.64, based on 94 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Taylor Morrison Home's current ROC % of 5.15% is 11% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Taylor Morrison Home and its competitors. For the Homebuilding & Construction industry, the median ROC % is 4.64 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Taylor Morrison Home's current ROC % is 5.15%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Taylor Morrison Home stock overvalued right now?
Based on GuruFocus' analysis, Taylor Morrison Home (TMHC) is currently considered Modestly Overvalued. The stock's GF Value™ is $55.83, compared to a current price of $72.45 — trading 29.8% above its estimated fair value. The current ROC % is 5.15% and 11% above the Homebuilding & Construction industry median of 4.64. Taylor Morrison Home's overall GF Score™ is 63/100 with 6 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Taylor Morrison Home (TMHC), the current ROC % is 5.15% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Taylor Morrison Home (TMHC) Overvalued in 2026?
Based on GuruFocus' analysis, Taylor Morrison Home stock appears to be overvalued.
The current stock price of $72.45 is trading 29.8% above its estimated GF Value™ of $55.83.
GuruFocus considers Taylor Morrison Home to be Modestly Overvalued.
Key valuation signals for TMHC:
ROC %: 5.15%
GF Value™: $55.83 vs. price of $72.45 (29.8% above fair value)
Industry Position: 11% above the Homebuilding & Construction median
No single metric tells the full story. See the TMHC stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Taylor Morrison Home Corp is an American residential construction company engaged in residential homebuilding and the development of lifestyle communities. It designs, builds, and sells single and multi-family detached and attached homes in traditionally high growth markets for entry level, move-up, and resort lifestyle buyers. The company has four reportable segments: East, Central, West, and Financial Services. The majority of the company's revenue is derived from its West Segment.
63GF Score
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ROC % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
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