Taylor Wimpey (TW.L) Margin compression and downgraded shareholder returns, Maintain Sell

Equity Research 3 August 2026 | 4:45PM BST

Taylor Wimpey (TW.L): Margin compression and downgraded shareholder returns, Maintain Sell

Post 1H26 results, our PBT estimates change -5% to -9% due to lower gross margins Rebecca Parker | and higher operating expenses, somewhat offset by lower interest costs. We lower Goldman Sachs International our PT -7% to 69p (from 74p), implying -12% downside. We maintain our Sell rating Jonathan Kownator on Taylor Wimpey. The company’s deteriorating volume and pricing trends relative to | peers will likely drive operational underperformance, leaving its P/E valuation Goldman Sachs International

premium unsupported particularly given the downgraded shareholder distribution Kuber Sood, CFA | policy (P/E of 13.5x vs peers 11.0x, P/B of 0.63x vs peers 0.67x (Dec-27)). Goldman Sachs India SPL

Continued pricing and volume pressure: We estimate a -2.0% contraction in underlying pricing, driven by persistent demand weakness in the South of England and the continued run-off of Greater London apartment schemes. Although we expect positive completions mix to drive overall ASP growth of 0.5%, we note this sits below the company’s 1.0% guidance. On volume, net private sales rates remain under pressure (down -5.0%y/y), and we forecast 10,614 completions for the full year, positioning our estimates at the conservative lower bound of the company’s 10,600 to 10,800 guidance. With build cost inflation estimated at 4.0%, the divergence between pricing and rising input costs drives an estimated gross margin contraction of 310bps to 14%.

Lowered shareholder returns: The decision to cut the annual shareholder distribution policy from 7.5% of net assets to 4% validates our concerns regarding the sustainability of the shareholder return policy. This reset highlights the prolonged operational headwinds facing the business, and reinforces our view that Taylor Wimpey’s historical premium valuation relative to peers is no longer justified.

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Taylor Wimpey (TW.L)

Exhibit 1: Taylor Wimpey is trading at +1.3 s.d. vs its LT Exhibit 2: Taylor Wimpey is trading at -1.7 s.d. vs its LT average, while EPS is expected to decline 36% in Dec-26 average on a P/B basis Taylor Wimpey P/E 12m fwd vs 2yr CAGR EPS growth and GSe Taylor Wimpey P/B 12m fwd vs 2TM (2yr CAGR) RoE growth and EPS growth Dec-26/27/28 (2014-now) GSe RoE Dec-26/27/28 (2014-now)

P/NTM cons. EPS P/B (NTM forward) 20%

2TM RoE cons. 12 1.5 15% 10% 10 0% 8 1.0 10% -10% 6

Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Dec-23 Dec-24 Dec-25 Dec-26 Dec-27 Jul-15 Feb-16 Sep-16 Apr-17 Nov-17 Jun-18 Jan-19 Aug-19 Mar-20 Oct-20 May-21 Dec-21 Jul-22 Feb-23 Sep-23 Apr-24 Nov-24 Jun-25 Jan-26 Aug-26 Mar-27 Oct-27 May-28 P/NTM cons. EPS Average +1 s.d. P/B (NTM forward) Average +1 s.d. -1 s.d. 2TM EPS growth cons. GSe EPS growth -1 s.d. 2TM RoE cons. Gse RoE

Source: Goldman Sachs Global Investment Research, LSEG Data & Analytics Source: Goldman Sachs Global Investment Research, LSEG Data & Analytics

n EPS: Our 2026-30E PBT estimates move by -5% to -9% as we account for lower gross margins and higher operating expenses, somewhat offset by lower interest costs. n EV/IC multiple: Our EV/IC multiple moves to 0.56x (from 0.64x) as we update our Jun-2027 ROIC estimate and apply a 40% discount (previous: 35%), as we account for the lower medium-term ROIC trajectory and reduced shareholder returns.