Bellway: Not Losing The Plot

Published on

A commentary from Gemma Boothroyd, Analyst at Freetrade, on Bellway’s trading update today.

Bellway: Not Losing The Plot

Bellway plc (LON:BWY) walked into this morning’s earnings with a whole lot of confidence. And in fairness, the homebuilder was able to justify plenty of the pep in its step.

Demand hasn’t wavered, and neither has Bellway’s ability to jack up prices and widen its margin too.

Get The Full Series in PDF

Get the entire 10-part series on Charlie Munger in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.

Q1 2022 hedge fund letters, conferences and more

It’s been a massive beneficiary of the UK housing market’s boom, taking advantage of the past two years’ record high demand and prices.

But what now that the market’s showing signs of slowing?

Bellway isn’t paring back its forecasts. It’s opting for the glass half full approach.

Though anybody shopping for a mortgage might soon feel a bit less optimistic.

Rising interest rates aren’t going to be music to a property shopper’s ears. Toss in the ever-growing cost of living, and buying a home becomes even more challenging. So even though Bellway’s reservations are ahead of last year’s for now, those tides might soon turn.

Shareholders will be crossing their fingers that’s not the case.

Bellway’s share price has been tumbling all year, now sitting at about half of its pre-pandemic price.

Bellway’s dividend increase is somewhat of a comfort, and zooming out, the homebuilder isn’t alone in its share price struggles. Taylor Wimpey plc (LON:TW), Berkeley Group Holdings PLC (LON:BKG) and Barratt Developments PLC (LON:BDEV) are all significantly down this year as well. It suggests the hit’s being felt sector wide.

All eyes will be on the homebuilders’ predictions as they continue to report in the upcoming weeks. The final months of the year are always the toughest for the sector. So they’ll be the ultimate truth sayers as to what investors can expect when sales start to slow.