After a strong 2017, the house builder had a miserable start to 2018, finding itself below £30 and at a 9 month nadir of £29.35 by late March. But since then it had started to recover, even if there have been a few wobbles along the way, with Bellway now sitting at a current trading price of £33.99.
Though the firm’s half year results on 20th March were greeted warmly by investors, they weren’t enough to prevent the stock from hitting that aforementioned sub-£30, 2018 nadir. Highlighting a positive backdrop of low unemployment and low interest rates, Bellway said it was on track to build 10,000 homes this year, a record for the company. Already the company has sold 4741 homes during the first half, a 6.3% increase on the same period in 16/17, with average selling prices surging 7.7% to £275,945.
This helped revenue jump a healthy 15.3% to £1.324 billion, with growth profit up a similar 15.6% to £343.1 million. In fact, all of the numbers were very good: the gross margin rose 10 basis points to 25.9%, operating profit increased 16.5% to £294.2 million and pre-tax profit found itself 16.6% higher to £288.7 million.
In terms of Tuesday’s trading statement, investors will want further confirmation that the company will reach that 10,000 homes target. Whether or not there has been a slowdown in properties sold, meanwhile, may well be the deciding factor in regards to how the markets react to the update.
Bellway (LON:BWY) has a consensus rating of ‘Buy’ alongside an average target price of £37.88.
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