Housebuilder Taylor Wimpey (LSE: TW) is the biggest FTSE 100 gainer in today’s trading, with a 3.6% increase in its share price. This follows the release of its healthy half-year results.
Taylor Wimpey share price surges on good results
Its revenue was up a huge 191% from the first half of 2020. When I first looked at these numbers, I was encouraged to see the extent of the recovery. But I took it with a pinch of salt. These figures look disproportionately good as 2020 saw limited business activity. That is, until I compared them to its 2019 performance. That is when they really look impressive. Compared to the first half of 2019, its revenue was still up some 27%.
Similarly, its profits also showed a positive trend. It clocked up £287m in net profit, compared to a loss last year. This was an 18% increase over the comparable number for 2019. The company also expects an operating profit of £820m for full-year 2021, just a bit below the number for 2019.
What’s next for the UK’s housing market?
I also like that it has addressed a question that is quite likely to be top of mind for investors (or potential investors) like me.The question is, what happens to the housing market once the stamp duty holiday is withdrawn? The rollback began from July onwards and will gather pace over the year.
Taylor Wimpey said that “customer interest in reservations [is] extending well beyond the end of the Stamp Duty Land Tax holiday”. Further, it pointed to other developments supporting the housing market, such as “low interest rates, good mortgage availability and Government support for customers in the form of Help to Buy”. These are still very much in play, even if there is some effect from the withdrawal of the stamp duty holiday.
Would I buy the FTSE 100 stock?
Based on its latest numbers, I think there is room for the Taylor Wimpey share price to rise more over time. It may not happen overnight or even in the next month, but if I am willing to hold on to the stock for a while, the returns can start kicking in.
I say this for two reasons. One, its share price has made significant gains since last year’s market crash. But it is still much lower than its pre-pandemic levels. It started 2020 at over 200p, a level it has not touched since. If however, both its results and its outlook continue to be robust, I think the level is achievable once again.
Two, the economy is expected to pick up pace now as restrictions have all but lifted and 89% of the UK’s population above 18 years of age has received at least one vaccine shot. At the same time, interest rates are still quite low. And going by Bank of England speak, are unlikely to rise anytime soon. This should continue to support the housing market.
I like the Taylor Wimpey share. It is a buy for me.