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FTSE 100 headline Taylor Wimpey (LSE: TW.) has been going through a difficult time in recent months due to economic turbulence.
The company released annual results on February 28 for the year ending December 31, 2023. The results were not great overall, but that was to be expected. This is due to volatility linked to higher interest rates and inflationary pressures hurting the company.
Despite the results, I would still happily buy some shares for my holdings as soon as I have some cash to invest. This is why!
Breaking down the results
Taylor Wimpey shares have fallen marginally since the results were published, which doesn't worry me nor do I think it was unexpected.
However, over a 12-month period the shares rose 18%, from 118p this time last year to current levels of 138p. Before the results, they were trading for just over 140p.
So what are the results headlines? Financially, revenue and profit before tax fell by 20.5% and 42.8% compared to last year. Adjusted earnings per share also fell 50% and margin levels also fell. Finally, completions compared to the previous year also decreased. Although cash levels fell, Taylor Wimpey managed to increase its dividend by 1.9%.
In terms of future prospects, it doesn't look like the company expects much change in the current difficult business conditions in 2024. He referenced 2025 as to when it might see a potential shift in momentum.
My investment case
It is worth reiterating that a disappointing performance was expected and that many runners' forecasts came true here.
Given the results, as well as the current economic outlook, which is still a bit uncertain, I remain bullish on the stock.
To start, I'm a long-term investor, which I would define as five to ten years. So while there are short-term issues and macroeconomic shocks, I'm looking to the future to see how stocks could rise to bolster my holdings and wealth.
With this in mind, the real estate imbalance along with Taylor's broad profile and decent balance sheet help my investment case. With demand for housing far outstripping supply, there is an argument that when volatility subsides, the business should see solid demand and performance growth in the coming years. This could boost its share price and any investor's performance.
Continuing with this, a dividend yield close to 7% today is attractive, especially considering the recent problems the company and the broader market have had to endure. Additionally, Taylor's dividend also appears to be well covered by earnings. However, I am aware that dividends are not guaranteed.
Finally, the stock appears to be a decent value for money with a P/E ratio of 13. I think this is cheap considering Taylor's dominant position in the market and its future prospects.
I think it would be easy to get discouraged by recent results. However, for me, the short-term issues and volatility are outweighed by the long-term outlook and decent fundamentals that Taylor stock offers.
The ongoing ongoing malaise offers me the opportunity to buy cheaper stocks now, ahead of any potential rally. Plus, I think the passive income opportunity seems too good to miss.
