Yahoo Finance Taylor Wimpey plc (LON:TW.): Is It A Good Long Term Opportunity?
The most recent earnings release Taylor Wimpey plc’s (LSE:TW.) announced in December 2017 indicated that the business endured a minor headwind with earnings declining from UK£589.30M to UK£555.30M, a change of -5.77%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Taylor Wimpey’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. See our latest analysis for Taylor Wimpey
Analysts’ outlook for next year seems positive, with earnings climbing by a robust 26.40%. This growth seems to continue into the following year with rates reaching double digit 31.93% compared to today’s earnings, and finally hitting UK£790.27M by 2021.
Even though it is helpful to understand the growth year by year relative to today’s level, it may be more valuable to estimate the rate at which the company is rising or falling every year, on average. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Taylor Wimpey’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 9.94%. This means, we can assume Taylor Wimpey will grow its earnings by 9.94% every year for the next few years.
Next Steps:
For Taylor Wimpey, there are three important factors you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is TW. worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TW. is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TW.? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass 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.
