Taylor Wimpey Share Price Forecast August 2021 – Time to Buy TW?
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Shares of British housebuilding company Taylor Wimpey (LSE: TW) have increased by more than 10p after the company raised its full-year earnings outlook on Wednesday. As Britain’s housing boom is expected to outlast the tax holiday period, the company has joined some of its bigger peers in projecting sustained demand.
Taylor Wimpey – Technical Analysis
Taylor Wimpey’s financial statement indicates that its market cap is £6 billion with total assets worth £5.75 billion. Revenue for 2020 was disappointing as the company only earned £2.79 billion compared to the £4.34 billion revenue in 2019. The debt to assets ratio of the company is at 30.14%. TW shares closed on August 4th at £168 with an uptrend of 1.91%.
Oscillators for Taylor Wimpey such as Stochastic RSI Fast (3, 3, 14, 14)(94.72), Williams Percent Range (14)(−27.69), Bull Bear Power(14.58) and Ultimate Oscillator (7, 14, 28)(44.20) are pointing towards a neutral action. Moving averages such as Volume Weighted Moving Average (20)(161.81) and Hull Moving Average (9)(166.09) are pointing towards buying.
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Recent Development
UK homebuilders are able to forecast a brighter outlook and driven up prices thanks to cheap loans and pandemic driven preference for large houses from consumers who have saved up during lockdowns. According to the figures released recently, the company has completed 7303 homes in the six months leading up to July 4th, compared to 2771 the year before. This drove up shares to 169.8p per share in its afternoon trading. The company’s housebuilding delays that struck completions of its fourth-quarter helped it achieve record first-half performance.
Taylor Wimpey managed to secure £287.5 million in the last 6 months which is quite an achievement as it recorded a profit loss before tax of £39.8 million last year. The company expects operating profits for this year to be around £820 million. It has forecasted new house completions to be at 13200 to 14000. The company has rejected suggestions that a bubble has been formed in the UK housing market after announcing positive half-year profits.
Should You Buy TW Shares?
A surprising fact is that the shares are down by a fifth from their spring highs despite the overall financials, although they are 15% higher than a year ago. The UK government launched 95% mortgage guarantee scheme which drove prices up 8.8% on year in June. However, share prices started to slide which indicated that investors have been spooked by fears of another lockdown. Therefore, it may take TW shares quite a while to return back to the heights of last February. Buyers need the confidence to get back n the housing ladder which is totally dependent on how well the UK recovers from the coronavirus pandemic.
Another risk is that although the company is procuring more plots that will rise in value, it can be short-lived. There is a great deal of uncertainty regarding how long the property market can be supported before being naturally corrected. From an income point of view, the risk is pretty high as homes are illiquid assets. This means that the positive balance sheet of the company won’t mean much if completions aren’t converted into cash. This can reduce Taylor Wimpey’s amount available to pay dividends. TW shares could get a boost from income investors buying into the shares, which in turn should influence more growth-focused investors to join in. Considering all of this, investors can pick up these shares at the moment.
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