My Taylor Wimpey (LSE: TW) shares have taken a beating, plunging 22% over the past year. Yet when I crunch the numbers, they still look like they’re worth considering to me. But are they?

A word of warning. I first bought shares in the FTSE 100 housebuilder in 2023. In that relatively short period, they’ve been highly volatile. At one point, I was sitting on a 40% paper gain. Now I’m down 5%.

Higher interest rates have hit buyer confidence and made mortgages more expensive, hitting demand. And that’s on top of long-term affordability issues, not to mention the slowing economy. Higher inflation’s driven up labour and material costs, further squeezing margins. It’s a lot to take on.

Is this FTSE 100 stock truly a bargain?

Like many of its rivals, Taylor Wimpey reported a drop in property completions last year. The board responded by offering incentives and discounts to buyers, again shrinking margins.

Yet the balance sheet remains strong. Taylor Wimpey boasts a robust land bank, low debt and a disciplined approach to managing costs. 

With a price-to-earnings ratio of 11.6 times, the stock looks cheap compared to its historical average and peers. That’s a key reason why I see an opportunity here.

The UK still faces a chronic housing shortage, supporting demand. The Bank of England’s expected to cut interest rates two or three times this year. If it does, mortgage costs could fall and buyers return, boosting sales volumes and profitability.

None of this is guaranteed. Markets expected six interest rate cuts last year. We got just two. Inflation remains sticky. Donald Trump’s tax cuts and trade tariffs could keep it that way.

In its trading update on 16 January, Taylor Wimpey said full-year UK completions were towards the upper end of its guidance range, with operating profit in line with expectations. We’ll know more when final results published on 27 February.

The group ended 2025 with a solid £2bn order book, representing 7,312 homes. However, the board also cautioned that Budget hikes to employer’s National Insurance and the Minimum Wage will push up costs from April.

A brilliant dividend yield

I haven’t mentioned the dividend yet. That’s a huge selling point. The forecast yield for 2025 is 8.5%. The board policy is to pay 7.5% of net assets each year, typically around £250m. 

I don’t expect rapid growth. Last February, the board lifted the dividend by a fraction of a penny, from 4.78p to 4.79p. Given the sky-high yield, it’s hard to complain.

Taylor Wimpey remains cash generative. It’s weathered previous downturns while maintaining attractive shareholder returns. But if things get really bad, it could be cut.

The 16 analysts offering one-year share price forecasts have produced a median target of just over 148p. If correct, that’s an increase of around 27% from today. Combined with that yield, this would give me a total return of 35%. Fingers crossed!

For now, Taylor Wimpey remains a well-managed business with long-term growth potential. While risks remain, particularly around interest rates and consumer sentiment, its valuation looks compelling. I won’t buy though as I already have a big stake. But I feel the shares are worth investors considering.