TAYLOR WIMPEY (TW.) – Construction
| Price: 102.15p -3.4% | P/E 33.1x |
| Market Cap: £3.75bn | Yield 8.6% |
Housebuilder Taylor Wimpey delivered a downbeat trading statement for the period from the end of June to 9 November.
The opening comment on UK trading more or less sums it up: ‘Reflecting current uncertainty in the housing market ahead of the November Budget, we continue to experience softer market conditions in the second half of the year to date.’
Net private sales per outlet per week are down on last year, even including ‘bulk deals’ which are sales to buy-to-let operators or housing associations, plus the order book is lower than last year.
There isn’t a cut to guidance, however, so total UK completions and operating profit are seen in line with its previous forecasts (10,400 to 10,800 completions and £424 million of profit), but that isn’t much cause for celebration.
Our View
There are plenty of stale bulls of the housing stocks on the basis they are cheap with high yields. The problem is stocks can stay cheap for a long time – valuation by itself isn’t a catalyst and never has been.
When the firm says completions will be in line, our read is they will likely be towards the low end, in which case TW will have to continue to manage the business ‘tightly’ to deliver on its earnings promise.
Read the press release here:https://www.taylorwimpey.co.uk/corporate/investors/results-and-reports
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