Though it was certainly a bumpy ride, especially around across the summer, 2017 ended up being a strong year for the British housebuilder. Starting at £1.54, it managed to close out December at £2.08, cementing an impressive 35% across the 12 months.
Things initially got off to a good start in 2018 as well, the stock quickly climbing to a 20-ish month high of £2.11. Then it released its January update and it all went to pot, the negative reaction to that statement, combined with the fears of rising interest rates that have gripped the markets, leading the firm to a 7 month low of £1.79 in early February. And while it has rebounded since then, it is still off its highs, with Taylor Wimpey (LON:TW) PLC at a current trading price of £1.90.
So, what was so bad about the company’s January statement that it sparked this recent decline? Well, to be honest, not a lot. Completions rose 5% to 14541 in 2017, with the average selling price was up 4% to £264,000. It also revealed that its operating profit margin improved from 20.8% to 21.2%, that it had net cash of £512 million and that it was set to pay out a total dividend of £500 million in 2018.
However, the fact that its order book slipped from £1.68 billion to £1.63 billion year-on-year, alongside a comment from CEO Pete Redfern stating that the company expects to see further growth in the housing market in 2018 ‘but at levels not as strong’ as seen in previous years, seemed to sour investors on the update.
In terms of Wednesday’s annual results, investors will want to see profit numbers to match the upbeat tone set by Redfern, alongside a comment on current trading given the continued fears that the housing market has peaked.
Taylor Wimpey PLC has a consensus rating of ‘Hold’ alongside an average target price of £2.13.
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