As the Taylor Wimpey (TW) share price falls, I see a buying opportunity

first_img Enter Your Email Address Alan Oscroft | Wednesday, 26th February, 2020 | More on: TW I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Taylor Wimpey (LSE: TW) released 2019 results Wednesday, and the share price promptly lost nearly 5% of its value. Is the much-feared collapse in housebuilder stocks finally upon us?Well, no, I really don’t think so.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…House prices were flat during 2019, and investors in anything related to property don’t like to see that. It does surprise me, though, that that a lot of people seem to think housebuilders need rising house prices to make money. They don’t.But it is perhaps a sign of weakening demand, and we also have another year of lingering uncertainty over Brexit. A drop in demand could indeed harm Taylor Wimpey’s profits.Completions upThe company reported a 5% increase in completions over the year, to 16,042 homes (from 15,275 in 2018). That led to a 6.4% rise in revenue to £4,341.3m. But build costs have been increasing, resulting in a 3.4% fall in operating profit to £850.5m.Net cash is down, from £644.1m a year ago to £545.7m, but that’s still a very healthy position to be in. Just think of all the FTSE 100 companies that are carrying huge net debt, but whose share prices are valued up with, and beyond, Taylor Wimpey’s.As for any possibility of falling demand, it doesn’t seem to be showing up yet. At 31 December, Taylor Wimpey had a forward order book of 9,725 units, worth a total of £2,176m. A year previously we were looking at 8,304 units valued at £1,782m, so there’s a clear improvement there.PressuresLooking forward, it seems unlikely that current pressures on housebuilders will abate. It looks like house prices will remain subdued during the year, while Taylor Wimpey says it expects build cost inflation in 2020 to come in around 3%.So, while demand for new homes seems robust, I reckon we’ll most likely see a similar outcome in 2020. That’s another increase in completions and revenue, but further pressure on operating profit. The firm does say it’s “focused on reducing underlying costs to mitigate future build cost inflation,” so that will probably help a little.Saying all that, I really don’t see a short period of rising build costs as any real problem when I look at the big picture. If there’s any sustained flat or even downward trend in house prices, that would surely feed through to lower prices for building land. There would be a lag, of possibly a few years, between the cause and the effect.ShortageBut we’re still facing a big housing shortage in the UK, with recent analysis suggesting a shortfall of between one and 1.2 million homes. That surely means a profitable long-term future for housebuilding firms and their shareholders.Coming back to the 2019 results, rather than focusing on the short-term downsides, my attention is more drawn to Taylor Wimpey’s dividends. The company handed over £599.7m in total dividends in 2019 (up from £499.5m in 2018), and proposes to pay a further £610m for 2020.I say forget Brexit, look beyond 2020, and keep taking the cash. “This Stock Could Be Like Buying Amazon in 1997” I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Alan Oscroft 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. As the Taylor Wimpey (TW) share price falls, I see a buying opportunitycenter_img Our 6 ‘Best Buys Now’ Shares Simply click below to discover how you can take advantage of this. 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