Since May 2025, Tri Pointe Homes has been in a holding pattern, posting a small loss of 2.3% while floating around $30.83. The stock also fell short of the S&P 500’s 11.9% gain during that period.

Is there a buying opportunity in Tri Pointe Homes, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.

Why Do We Think Tri Pointe Homes Will Underperform?

We're cautious about Tri Pointe Homes. Here are three reasons there are better opportunities than TPH and a stock we'd rather own.

1. Backlog Declines as Orders Drop

Investors interested in Home Builders companies should track backlog in addition to reported revenue. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Tri Pointe Homes’s future revenue streams.

Tri Pointe Homes’s backlog came in at $1.01 billion in the latest quarter, and it averaged 11.2% year-on-year declines over the last two years. This performance was underwhelming and shows the company is not winning new orders. It also suggests there may be increasing competition or market saturation.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Tri Pointe Homes’s revenue to drop by 17.8%, a decrease from its 2.3% annualized growth for the past five years. This projection is underwhelming and suggests its products and services will see some demand headwinds.

3. EPS Took a Dip Over the Last Two Years

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Tri Pointe Homes, its EPS declined by more than its revenue over the last two years, dropping 7.5%. This tells us the company struggled to adjust to shrinking demand.

Final Judgment

We cheer for all companies making their customers lives easier, but in the case of Tri Pointe Homes, we’ll be cheering from the sidelines. With its shares underperforming the market lately, the stock trades at 13.3× forward P/E (or $30.83 per share). This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere. We’d recommend looking at an all-weather company that owns household favorite Taco Bell.

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