Can Bellway bounce from its recent lows following Tuesday’s interim results?
2017 was a pretty impressive year for the housebuilder. While it couldn’t maintain the £37.50-crossing all-time highs struck in last October, its December closing price of £35.83 still marked a whopping 45% increase over 12 months.
In contrast 2018 has been a bit of a nightmare. The prospect of rising interest rates in the UK, alongside fears of a slowdown in the housing market, has sent the stock to its worst price since the end of last September. Bellway now sits at a current trading price of £30.52, a 14% drop from where it began the year.
In amidst that decline came a very promising February update. The firm said that ‘market conditions continue to be favourable and customer demand for new homes remains strong’, with the company seeing a 7.2% increase in reservations per week to 178, with a drop in its cancellation rate from 12% to 11% year-on-year.
Combine this with a 6.3% increase in housing completions and a 7.8% jump in its average selling price to £276,000, and Bellway is expecting to post a 14% surge in half year revenue to £1.3 billion on Tuesday. Its operating margin, meanwhile, is set to nudge just above the 22.0% seen in 2017.
Given that most of its big numbers were announced back in February, the reaction to Tuesday’s results may well be come from any comment on current trading.
Bellway (LON:BWY) has a consensus rating of ‘Buy’ alongside an average target price of £36.87.
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