The overreaction to the referendum vote can be gauged by housebuilder Redrow's (RDW) share price in the six months that followed. Having touched an intra-day low of 100p, the shares have since risen by 370 per cent.
And it's not difficult to see why. In the six months to December 2016 operating profits rose by a third to £144m, and the return on capital employed grew from 21 per cent to 24 per cent. Strong cash flow reduced gearing from 14 per cent to a nominal 5 per cent, and medium-term guidance has been updated to a target of 77p earnings per share by the 2019 financial year, against the 55p recorded at the latest full year.
Legal completions increased by 13 per cent to 2,459, while the private order book jumped 35 per cent to £897m. Sales outlets were a touch higher at 122 but should increase noticeably in the second half. Revenue is also likely to benefit from the acquisition in February of regional housebuilder Radleigh Homes, which completed 188 homes in 2016, and with plots in its consented and strategic land bank totalling 2,500.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to June 2017 of £293.5m and EPS of 64.9p (from £250m and 55.4p in FY2016).
| REDROW (RDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 470.6p | MARKET VALUE: | £1.74bn | |
| TOUCH: | 470.5-470.6p | 12-MONTH HIGH: | 475p | LOW: 275p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 297p | NET DEBT: | 5% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 603 | 104 | 22.9 | 4 |
| 2016 | 739 | 140 | 31.0 | 6 |
| % change | +23 | +35 | +35 | +50 |
Ex-div: 23 Mar Payment: 5 May | ||||
