However market uncertainty lingers with the current political environment.
Taylor Wimpey shares rise as it reports a positive end to 2018
- Taylor Wimpey reports a good end to the year, lift shares of the rest of the sector in early trading.
- Management expect 2019 volumes to be similar to 2018 despite political uncertainty.
- We remain cautious on the sector and recommends Taylor Wimpey as a ‘hold’.
Taylor Wimpey’s results this morning have lifted its own share price by 5% and dragged up some of its peers with them as they say that they ended 2018 on a positive note.
Total home completions rose by 3% with average selling prices stable at roughly £264k. Despite the cautionary stance of buyers in the London and the South East, the order book at the end of the year stood at £1.78bn, 9.5% higher than a year ago.
With the strong order book they foresee 2019 volumes to be similar to 2018 despite the uncertain political and macro-economic environment. This view is supported by buyer interest and the availability of a wide range of competitive mortgage products while employment levels remain high.
However, there certainly has been a slow-down in the rate of revenue growth from a few years ago and labour and material cost inflation has become more prevalent. Despite the good underlying numbers reported by the sector, the share prices are reflecting the increased risk to the sector from the political and economic uncertainty. We still maintain our cautious stance on the sector and Taylor Wimpey and continue with our ‘hold’ recommendation for investors looking for growth and willing to accept a medium to higher level of risk.
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