Will Taylor Wimpey plc’s Stock Price Outperform Persimmon plc, Bellway plc, Redrow plc And Berkeley Group Holdings PLC After Results?

Does Taylor Wimpey plc’s (LON:TW) (LSE:TW.L) stock price have more investment appeal than those of Persimmon plc (LON:PSN) (LSE:PSN.L), Bellway plc (LON:BWY) (LSE:BWY.L), Redrow plc (LON:RDW) (LSE:RDW.L) and Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L)?

Taylor Wimpey plc
Taylor Wimpey plc

The stock price of Taylor Wimpey plc (LON:TW) (LSE:TW.L) is flat today after the release of its 2016 results to the stock market. Its revenue increased 17.1% to £3676.2 million, while operating profit moved 20% higher to £764.3 million. The company completed a total of 14,112 homes, which is 4.8% higher than in 2015. Investors may also cheer at the fact Taylor Wimpey’s UK average selling price was 10.9% higher at £255k.

The company’s stock price could benefit from the good progress made towards its medium term targets. Its target total of £1.3 billion in dividends is to be paid in cash to stockholders during the 2016-18 period. Of this, £355.9 million was paid to stockholders in 2016, with approximately £450 million declared for 2017.

Taylor Wimpey is targeting an average annual return on net operating assets of 30% this year, with a target average operating margin of 22%. It has made a good start to 2017 and holders of its stock may be pleased in so far as trading has been robust and demand levels have been buoyant. Taylor Wimpey believes the fundamentals of the UK housing market remain sound, underpinned by a competitive mortgage market and low interest rates.

In the last 3 months, Taylor Wimpey’s stock price has risen 21%. This is ahead of the stock prices of other housebuilders such as Persimmon plc (LON:PSN) (LSE:PSN.L), Bellway plc (LON:BWY) (LSE:BWY.L), Redrow plc (LON:RDW) (LSE:RDW.L) and Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L). Persimmon’s shares are 20% higher, Bellway’s stock price is 7% up, Redrow has gained 20% and Berkeley Group’s stock price is 20% higher.

In my view, Taylor Wimpey has a bright future as an investment. I feel it has a good strategy and sound finances. I believe the UK housing market could experience a difficult 2017 as Brexit negotiations start, but I’m optimistic about its prospects in the long term. I’m bullish on Persimmon, Berkeley Group, Bellway and Redrow, but think Taylor Wimpey’s stock price will perform well on a relative basis.

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