Taylor Wimpey Share Discussion Threads

[gbh2] 24/7/2018 08:55

Difficult to buy a house on part time jobs with zero hour contracts!

[m4rtinu] 24/7/2018 08:51

Whilst TW seem to be managing their own business well, I think share price here and in some other sectors will reflect the strength/ weakness of overall economy.

I feel there is some uncertainty over how the UK economy is doing. "Blip due to weather" in Q1? Small pick up in Q2? Weakness in wage growth given apparent strength in employment numbers.

[gbh2] 24/7/2018 08:51

imo Buying now is dead cash until the run up to the next ex divi date.

[purplepanther] 24/7/2018 08:49

Well it's open to interpretation is it not. The exact words were:"Increased landbank efficiency - reducing length of short term owned and controlled landbank years by c.1 year to 4-4.5 years"So they are either going to step up production to attain this or slow down investment in the land bank, or do a combination of the two. But either scenario means improved free cash flows which support the higher dividend payments.

[marksp2011] 24/7/2018 08:37

YepI read it as a reduction in land bank supporting more or less flat output which will increase roceAll is goodness but I am not expecting any growth in activity - at least there is no sign of corporate activity. Been there before:(

[purplepanther] 24/7/2018 06:37

MarkspLook I'm no accountant but you can improve returns on capital in either one of two ways - raising margins or improving asset turns. Now TW management has guided toward stable operating margins at 21%, so the considerable improvement in return on capital from 31.7% to 35% has to come from improving asset turns which I can only read one way, which is that they are speeding up development and therefore likely to post a growth in the top line and hence growing profits. But let's see shall we.

[marksp2011] 24/7/2018 05:43

Panther Earnings and returns will grow by reducing the land bank. To me that is the company recognising a steady state and assuming a static or falling land cost.That financial growth isn't coming from underlying business growth but from financial actions.It isn't bad or wrong but a recognition that volumes are at peak and they have decided to scale back investment.

[raffles the gentleman thug] 23/7/2018 21:45

Seeing as he's been on here calling the sell off overdone since June I'd wager he rather likes the shares m4rtinu

[m4rtinu] 23/7/2018 21:40

What is your view, Baracuda?

[baracuda2] 23/7/2018 21:04

So many experts on this thread!

[fenners66] 23/7/2018 20:31

I don't mind no growth though - maintain the 10% divi and that's fine by me.

[fenners66] 23/7/2018 20:30

Market is of the opinion that house builders earnings have peaked for now.
Inflation hitting costs but house prices have peaked ?

So its volume that matters and as there are only so many who can afford to buy regardless of the ones who would like to: thus that route is limited too.

[purplepanther] 23/7/2018 19:02

Sorry why no growth ?? As I pointed out earlier earnings have already grown from £490m to £660m over the last three years and anyone who participated in the Capital Markets Day would have come away with the understanding that return on capital was set to increase from 31.7% to 35% whilst time to develop the land bank was to decline - the implication being that earnings are going to continue to grow

[marksp2011] 23/7/2018 18:39

These are almost a utility. There are caps on production growth. Limits to margins they can get away with. Output won't rise or fall to any great extent.......so earnings and roce will stay good and constant. Cash cows but no growth. Better than a bondGood buy for income..... but don't expect growth....... let's hope they don't start trying to leverage up and buy each othet

[marksp2011] 23/7/2018 17:34

Housebuilders benefit from inflation if salaries grow ahead of inflation.

[podgyted] 23/7/2018 17:20

Meanwhile it falls.

Best house builder by a mile but the market doesn't like the sector - you could lose more capital, quite easily, than the projected dividend - I'm on the sidelines at present.

[sarahbudd] 23/7/2018 17:09

2.7m sell..

[purplepanther] 23/7/2018 16:47

Well I think buybacks definitely help growth companies over value companies. Lloyds problem is that the U.K. economy is moribund and it's a competitive banking market so there is absolutely no loan growth in real terms to speak of. So the only source of their earnings growth is really cost cutting which they have to do anyway to stand still against the evils of inflation and rising IT expenditure; or interest rate rises which haven't really been happening.So the market probably rightly lacks any faith that there will be rising earnings going forward. So they are a little running to stand still with the buyback programme, and it does little more than dampen volatility a little.I do believe the housebuilding sector is a little different in that it's a beneficiary of inflation and rising demand from future population growth in this country plus a chronic shortage of housing availability which has been going on for years. So I'm buying TW one should be buying into a rising earnings stream.

[fenners66] 23/7/2018 16:45

Ask Pidgley how his buyback is going at Berkeley Homes .

But he managed to offload some of his whilst the share price was (falsely?) held up.

They are now losing money on the share repurchase and the shareholders have been denied the dividend yield.

The - now - Non-shareholders are happy though!

[fenners66] 23/7/2018 16:42

I acknowledged that is a part of it - BUT "reduce (usually by a tiny %) the number of shares in issue"

If they were to announce that they had already agreed and tendered a price to buy back half of the shares before agreeing it with shareholders - fair enough we would see a significant increase in the next years eps.

But even that fantasy comes with a load of caveats.

1, What do they pay for them with ? Cash or more borrowings.
2. How can they be sure after burning all the cash that they will still have the same earnings in a years time ?
3, If they do announce it in advance - as they have to - if market likes it - the share price will go up and they overpay.
If market does not like it shares go down and they are just wasting money. It has to be the most inefficient way of buying shares ever - telling the market you are in for say 5% of the share capital.

Often buy backs are for an insignificant % - but with a very significant value of cash.
Then they announce a bond raise - with associated £ms in cost - together with a replacement bond raise in a few years to extend terms or secure rates before they rise always before the original bonds are due and always at huge "Exceptional Cost" (even though they always do this).

[m4rtinu] 23/7/2018 16:39

PP - as you prob know, Lloyds are doing a buyback. share price has dropped from 70p - 62.5p (approx) in that time, though to be fair it fell a bit at the start of the year (from c. 72p). Also during that time, very roughly 500 - 600m shares have been bought back BUT 300m shares have been issued (for bonuses).

Also, to finance the buyback the special dividend was cancelled (or hopefully, at least, suspended).

You could argue that share price would have been even lower, if no buyback, but I do wonder.

[steeplejack] 23/7/2018 16:38

https://www.thebalance.com/cash-dividends-vs-share-repurchases-357439Could be a lengthy debate!

[purplepanther] 23/7/2018 16:27

I have to disagree with that. Buybacks reward the long term shareholder for precisely the reason that earnings are shared between a smaller number of shares

[steeplejack] 23/7/2018 16:10

Long term studies show that share buy backs are not as productive as company's might wish.A good yield is far more supportive of a share price.

[fenners66] 23/7/2018 16:07

As you said a small minority selling brings price down.

A small minority (of shares in issue) brings price up - when they do buybacks.

And the next day the share price will fluctuate any which way it likes.

Buybacks effect the shares on the day, reduce (usually by a tiny %) the number of shares in issue - which long term has little effect on share price when compared to say profitability , cash flow, debt to equity ratio and dividend yields. None of which can be absolutely certain a year away.

But cash on the balance sheet for future dividends , or invested in better businesses is a far better use than buy-backs that would not affect me in any meaningful way - unless I was selling !

So buybacks are to reward the sellers of a company - dividends reward the owners - no brainer.