Taylor Wimpey – On Track For Guidance With Robust Demand, But Cost Inflation Lingers

Taylor Wimpey – On Track For Guidance With Robust Demand, But Cost Inflation Lingers
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Taylor Wimpey plc (LON:TW) expects to report full year results in-line with guidance. Operating profit is expected to be around £820m, with operating margins of 21-22%. The group has benefited from strong demand thanks to low interest rates and good mortgage availability. Higher house prices offset rising building costs over the year.

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More information on shareholder returns will be released with the full-year results in March.

The shares rose 1.4% following the announcement.

Taylor Wimpey's Strong Foundations

Matt Britzman, Equity Analyst at Hargreaves Lansdown:

“The foundations were strong throughout 2021 for housebuilder Taylor Wimpey, as interest rates remained low and the availability of mortgages was high. Total UK home completions were up 47% compared to the previous year with the average selling price continuing to rise, now up to £332,000 for the group.

The bold move to keep buying land throughout the pandemic continues to look like the right one, with just shy of 30,000 plots added to the short-term landbank over the past 18 months. And the group’s making further use of its strong cash position to reward shareholders, we’re expecting a buyback to be announced in March along with the standard dividend.

Management seemed cautiously optimistic in their outlook statements, with the group on track for full-year guidance but making reference to economic uncertainty and continued build cost inflation. Higher selling prices are enough to offset the rising costs for now, but there’s a limit to how long that can continue – especially if broader costs of living and mortgage rates increase.”

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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