I’d still snap up this FTSE 100 stock in a heartbeat, despite mixed FY results!

This Fool explains why she’s still bullish on this FTSE 100 house builder despite less than stellar FY results posted a few days back.

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FTSE 100 incumbent Taylor Wimpey (LSE: TW.) has endured a tough time in recent months due to economic turbulence.

The business released full-year results on 28 February for the year ended 31 December 2023. The results weren’t great overall, but this was to be expected. This is due to volatility linked to higher interest rates and inflationary pressures hurting the firm.

Despite the results, I’d still happily buy some shares for my holdings as soon as I have some investable cash. Here’s why!

Breaking down the results

Taylor Wimpey shares have fallen marginally since the results were posted, which I’m not concerned about or feel was unexpected.

However, over a 12-month period, the shares are up 18%, from 118p at this time last year to current levels of 138p. Prior to the results, they were trading for just over 140p.

So what are the headlines from the results? From a financial view, revenue and profit before tax dropped by 20.5% and 42.8% compared to last year. Adjusted earnings per share also dropped by 50% and margin levels dropped too. Finally, completions compared to the previous year also dropped. Although cash levels dropped, Taylor Wimpey still managed to increase its dividend by 1.9%.

In terms of the outlook ahead, it doesn’t look like the business is expecting much change to the current difficult trading conditions in 2024. It referenced 2025 as to when it could see a potential swing in momentum.

My investment case

It’s worth reiterating that the underwhelming performance was expected, and many broker forecasts came to fruition here.

Taking into account the results, as well as the current economic outlook, which is still a bit uncertain, I’m still bullish on the shares.

To start with, I’m a long-term investor, which I’d define as a five to 10-year period. So although there are short-term issues and macroeconomic shocks, I’m looking to the future as to how the shares could climb to bolster my holdings and wealth.

With that in mind, the housing imbalance coupled with Taylor’s extensive profile and decent balance sheet help my investment case. With demand for homes outstripping supply by some distance, there’s an argument that when volatility subsides, the business should see robust demand and performance growth for years to come. This could boost its share price and any investor returns.

Moving on, a dividend yield of close to 7% today is attractive, especially considering the recent issues the business and the wider market has endured. Plus, Taylor’s dividend also looks well covered by earnings. However, I’m conscious that dividends aren’t guaranteed.

Finally, the shares look decent value for money on a price-to-earnings ratio of 13. I think this is cheap considering Taylor’s dominant market position and future prospects.

I reckon it would be easy to be put off by the recent results. However, for me, short-term issues and volatility are trumped by the long-term outlook and decent fundamentals that Taylor shares offer.

The current continued malaise offers me the opportunity to buy cheaper shares now before any potential rise. Plus, I think the passive income opportunity looks too good to miss out on.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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