In distinction to the FTSE 100 as an entire, Taylor Wimpey (LSE: TW) shares have been in poor type in 2025 thus far. The inventory is down once more immediately (27 February) following the newest set of full-year numbers from the Excessive-Wycombe-based enterprise.

Massive drop in revenue

Income dipped simply over 3% to £3.4bn. On it’s personal, that doesn’t sound too unhealthy. Nevertheless, pre-tax revenue tanked over 32% in 2024 to £320m.

Why such a fall? Nicely, issues about affordability because of inflation rebounding definitely haven’t helped. Having dropped to the Financial institution of England’s goal of two% again in Might 2024, we’ve since returned to three%. Clearly, that is nonetheless quite a bit higher than the 11.1% set in October 2022. However it has pushed Governor Andrew Bailey and co to push again their forecast of returning to 2% by six months.

A consequence of that is that rate of interest cuts are possible be slower going ahead, hitting demand for properties constructed by the £4bn cap.

After all, not one of the above is a shock to the market and this goes some option to explaining why the shares have been buying and selling solely barely decrease this morning moderately than crashing in worth. Furthermore, there have been a number of, extra constructive issues for traders to digest.

Robust order guide

Regardless of the large drop in revenue, CEO Jennie Daly was (understandably) eager to place a constructive spin on issues. She mirrored that the beginning of the spring promoting season had been “sturdy“. An order guide of £2.26bn — up on the £1.95bn final 12 months — was additionally highlighted.

As factor stand, Taylor Wimpey expects to satisfy market estimates on working revenue of £444m in 2025. Whether or not that occurs is one other factor fully. As an apart, it’s price noting that momentary tax breaks (equivalent to for first-time consumers) will go on the finish of March and that increased taxes for companies will kick in just a few days later.

Big dividend yield

Naturally, nobody really is aware of the place the share price will likely be subsequent week, subsequent month or subsequent 12 months. So, what do we all know?

Nicely, Taylor Wimpey inventory at present modifications fingers for just below 13 occasions forecast earnings for 2025. That’s pretty common for the UK market as an entire. It’s additionally on par with different huge property gamers equivalent to Persimmon and Barratt Redrow. So, we’re not speaking a ridiculous valuation right here.

One other attraction is the yield. Though dividends are by no means assured, the previous at present stands at a monster 8.4%. For perspective, the FTSE 100 as an entire yields ‘just’ 3.5%.

The query is whether or not this revenue stream is definitely worth the threat concerned, particularly because the payout isn’t predicted to be coated by revenue. Ought to issues not enhance quickly, the corporate might have to start chopping its distributions.

Persistence required

If we assume that loads of negativity has already been factored in by the market, I reckon contemplating the shares immediately might ship an ideal return in time.

However that final bit is essential. Whereas the continued undersupply of high quality housing within the UK ought to imply that huge housebuilders like Taylor Wimpey recuperate in time (after which some), that is in all probability not one to contemplate for these hoping for a fast return.