After a very strong 2017, and impressive open to 2018, the house builder has gone off the boil in the last few months. Opening at £11.67, the stock had managed to strike an all-time high of £13.15 by the end of May, overcoming a wobble that had left it under £10.50 in early February.
Yet, as mentioned, the company has struggled since hitting that record peak. By the end of October it was trading in the £9.20s, its worst level in 15 months, and though it has lifted off those lows, it is still a way away from May’s highs. Bovis Homes Group (LON:BVS) now sits at a current trading price of £10.07.
Despite its recent market-troubles, September’s interim results weren’t half bad. Total competitions rose 4% to 1580, and though the private average selling price remained unchanged at £334,700, group revenue nudged up 1% to £432.2 million.
More importantly, a 280 basis points improvement to its gross margin to 20.9% helped pre-tax profit rocket 41% higher to £60.2 million, with its dividend also up 27% to 19p per share. On top of this Bovis claimed that, ‘following a robust summer’, it now expects its full year profits ‘to be at a record level and at the top end of the Board’s expectations’. Quite the performance for a company that has spent the last year or so mired in controversy over the quality of its properties.
As for Thursday’s Q3 update, investors will basically just want more of the same, i.e. an indication that the company is still on track to reach those promised record levels of profit.
Bovis Homes Group has a consensus rating of ‘Hold’ alongside an average target price of £12.03.
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