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Taylor Wimpey plc (LON:TW.), is not the largest company out there, but it saw significant share price movement during recent months on the LSE, rising to highs of UK£1.28 and falling to the lows of UK£1.00. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Taylor Wimpey's current trading price of UK£1.05 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Taylor Wimpey’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Taylor Wimpey
What's The Opportunity In Taylor Wimpey?
According to my valuation model, the stock is currently overvalued by about 24%, trading at UK£1.05 compared to my intrinsic value of £0.85. This means that the buying opportunity has probably disappeared for now. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Since Taylor Wimpey’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Taylor Wimpey?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Taylor Wimpey, at least in the near future.
What This Means For You
Are you a shareholder? If you believe TW. should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. Given the risk from a negative growth outlook, this could be the right time to de-risk your portfolio. But before you make this decision, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on TW. for a while, now may not be the best time to enter into the stock. you may want to reconsider buying the stock at this time. Its price has risen beyond its true value, on top of a negative future outlook. However, there are also other important factors which we haven’t considered today, such as the track record of its management. Should the price fall in the future, will you be well-informed enough to buy?