My Taylor Wimpey (LSE: TW) shares have taken a beating, plunging 22% over the previous 12 months. But after I crunch the numbers, they nonetheless appear to be they’re price contemplating to me. However are they?

A phrase of warning. I first purchased shares within the FTSE 100 housebuilder in 2023. In that comparatively quick interval, they’ve been extremely unstable. At one level, I used to be sitting on a 40% paper acquire. Now I’m down 5%.

Increased rates of interest have hit purchaser confidence and made mortgages dearer, hitting demand. And that’s on prime of long-term affordability points, to not point out the slowing financial system. Increased inflation’s pushed up labour and materials prices, additional squeezing margins. It’s rather a lot to tackle.

Is that this FTSE 100 inventory really a cut price?

Like lots of its rivals, Taylor Wimpey reported a drop in property completions final 12 months. The board responded by providing incentives and reductions to patrons, once more shrinking margins.

But the stability sheet stays sturdy. Taylor Wimpey boasts a sturdy land financial institution, low debt and a disciplined method to managing prices. 

With a price-to-earnings ratio of 11.6 instances, the inventory appears to be like low-cost in comparison with its historic common and friends. That’s a key motive why I see a chance right here.

The UK nonetheless faces a continual housing scarcity, supporting demand. The Financial institution of England’s anticipated to chop rates of interest two or thrice this 12 months. If it does, mortgage prices may fall and patrons return, boosting gross sales volumes and profitability.

None of that is assured. Markets anticipated six rate of interest cuts final 12 months. We acquired simply two. Inflation stays sticky. Donald Trump’s tax cuts and commerce tariffs may hold it that method.

In its buying and selling replace on 16 January, Taylor Wimpey mentioned full-year UK completions have been in the direction of the higher finish of its steering vary, with working revenue consistent with expectations. We’ll know extra when ultimate outcomes printed on 27 February.

The group ended 2025 with a strong £2bn order guide, representing 7,312 houses. Nevertheless, the board additionally cautioned that Finances hikes to employer’s Nationwide Insurance coverage and the Minimal Wage will push up prices from April.

A superb dividend yield

I haven’t talked about the dividend but. That’s an enormous promoting level. The forecast yield for 2025 is 8.5%. The board coverage is to pay 7.5% of web property annually, usually round £250m. 

I don’t count on fast development. Final February, the board lifted the dividend by a fraction of a penny, from 4.78p to 4.79p. Given the sky-high yield, it’s exhausting to complain.

Taylor Wimpey stays money generative. It’s weathered earlier downturns whereas sustaining engaging shareholder returns. But when issues get actually dangerous, it could possibly be lower.

The 16 analysts providing one-year share price forecasts have produced a median goal of simply over 148p. If appropriate, that’s a rise of round 27% from immediately. Mixed with that yield, this might give me a complete return of 35%. Fingers crossed!

For now, Taylor Wimpey stays a well-managed enterprise with long-term development potential. Whereas dangers stay, notably round rates of interest and client sentiment, its valuation appears to be like compelling. I gained’t purchase although as I have already got a giant stake. However I really feel the shares are price traders contemplating.