Taylor Wimpey: Homebuyer Interest Recovering From Late 2022 Nadir; Shares Significantly Undervalued

Taylor Wimpey’s April 2023 trading update confirmed for investors that while U.K. homebuyer confidence remains shaky, it is gradually improving in 2023. Taylor Wimpey’s year-to-date weekly private sales rate of 0.66 homes per sales outlet, excluding nonrecurring bulk sales, suggests that current homebuyer interest has improved since early 2023 and represents a marked increase of 38% relative to the second half of 2022—when forward orders crashed as U.K. mortgage interest rates spiked. Our long-term expectations for the no-moat homebuilder remain unchanged as does our GBX 190 fair value estimate. We think investors are too narrowly focused on the glum housing market conditions that currently prevail. Consequently, Taylor Wimpey shares continue to screen as materially undervalued and trade at a 34% discount to our unchanged fair value estimate.