Today is shaping up negative for Taylor Wimpey plc (LON:TW.) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.
Following the latest downgrade, the current consensus, from the 17 analysts covering Taylor Wimpey, is for revenues of UK£3.2b in 2020, which would reflect a painful 26% reduction in Taylor Wimpey's sales over the past 12 months. Prior to the latest estimates, the analysts were forecasting revenues of UK£3.7b in 2020. The consensus view seems to have become more pessimistic on Taylor Wimpey, noting the measurable cut to revenue estimates in this update.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with the forecast 26% revenue decline a notable change from historical growth of 8.9% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.2% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Taylor Wimpey is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that analysts cut their revenue estimates for this year. They also expect company revenue to perform worse than the wider market. We wouldn't be surprised to find shareholders feeling a bit shell-shocked, after these downgrades. It looks like analysts have become a lot more bearish on Taylor Wimpey, and their negativity could be grounds for caution.
Looking to learn more? We have estimates for Taylor Wimpey from its 17 analysts out until 2023, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Thank you for reading.