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What Should We Expect From Taylor Wimpey plc's (LON:TW.) Earnings Over The Next Few Years?

Simply Wall St

The latest earnings update Taylor Wimpey plc (LON:TW.) released in December 2018 signalled that the business gained from a strong tailwind, eventuating to a double-digit earnings growth of 18%. Below, I've presented key growth figures on how market analysts perceive Taylor Wimpey's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Taylor Wimpey

Analysts' expectations for next year seems rather muted, with earnings expanding by a single digit 3.6%. The following year doesn't look much more exciting, though earnings does reach UK£739m in 2022.

LSE:TW. Past and Future Earnings, April 29th 2019

While it’s useful to understand the growth year by year relative to today’s figure, it may be more insightful determining the rate at which the earnings are rising or falling every year, on average. The pro of this method is that we can get a better picture of the direction of Taylor Wimpey's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 3.7%. This means that, we can anticipate Taylor Wimpey will grow its earnings by 3.7% every year for the next few years.

Next Steps:

For Taylor Wimpey, there are three fundamental factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is TW. worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether TW. is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of TW.? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.