As Taylor Wimpey reports its full year results, Ian Forrest, investment research analyst at The Share Centre, explains what it could mean for investors.
Ian had this to say: “This morning, housing developer Taylor Wimpey reported a solid set of full year results and said it remained confident that 2017 will see ongoing stability and incremental price growth as a result of robust trading levels in the financial year to date. Indeed, the company reported a 17% hike in revenue, whilst operating profits were up 20% and basic earnings per share up 20% year-on-year. Interested investors should note that the average selling price rose 11% to £255,000 and the company built 14,112 new homes in 2016, up 4.8% on the previous year.
Pete Redfern, Chief Executive at Taylor Wimpey, highlighted to investors today that this was an ‘excellent performance’ set against an uncertain political and economic environment that stabilised in the final quarter. The group went on to acknowledge that customer interest remains high and it continues to focus on building a strong order book for the future. Furthermore, it was keen to highlight that it is confident that it can adapt to all market conditions from a position of strength and perform well, ‘underpinning its value proposition to shareholders and other stakeholders’.
Nevertheless, we remain cautious given weak wage growth and the fact that the GfK UK Consumer Confidence index remains in a 10 month downward trend, consumer confidence shows signs of waning. Therefore, we continue to recommend Taylor Wimpey as a ‘hold’. However, we would not discourage contrarian investors taking a position in this stock so long as they are willing to accept the higher level of risk associated with the sector. The company is well managed, has a strong cash position and has been returning capital to investors.”