Yahoo Finance At UK£1.70, Is Taylor Wimpey plc (LON:TW.) Worth Looking At Closely?
Taylor Wimpey plc (LON:TW.), which is in the consumer durables business, and is based in United Kingdom, saw significant share price volatility over the past couple of months on the LSE, rising to the highs of £1.88 and falling to the lows of £1.64. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Taylor Wimpey’s current trading price of £1.7 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Taylor Wimpey’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Taylor Wimpey
What is Taylor Wimpey worth?
According to my relative valuation model, the stock seems to be currently fairly priced. I’ve used the price-to-equity ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.75x is currently trading slightly below its industry peers’ ratio of 12.25x, which means if you buy Taylor Wimpey today, you’d be paying a fair price for it. And if you believe Taylor Wimpey should be trading in this range, then there isn’t much room for the share price grow beyond where it’s currently trading. Furthermore, it seems like Taylor Wimpey’s share price is quite stable, which means there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
Can we expect growth from Taylor Wimpey?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Taylor Wimpey’s earnings over the next few years are expected to increase by 22.6%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in TW.’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at TW.? Will you have enough conviction to buy should the price fluctuate below the true value?
Are you a potential investor? If you’ve been keeping tabs on TW., now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for TW., which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Taylor Wimpey. You can find everything you need to know about Taylor Wimpey in the latest infographic research report. If you are no longer interested in Taylor Wimpey, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
