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Bellway growing strongly

Margins and output are both expected to grow in the current year.
December 12, 2014

A strong half-year statement confirmed that business is booming for Bellway (BWY). Crucially, the housebuilder also stressed that tighter mortgage requirements and a less frothy London market both point towards growth in the current housing market becoming more sustainable.

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The price of new houses continues to rise, though, and this, together with a strong control on administrative and construction costs, is expected to lift operating margins in the current year from 17.2 per cent to 20 per cent. Confidence in the market is reflected in a near doubling to £233m of land purchases, although some of this came as a result of settling with previous land creditors. On top of this, the group has agreed terms on a further 4,400 plots, and plans to open its 16th sales division in the second half.

Analysts at broker Numis Securities have upgraded their forecasts by 7 per cent for the current year to pre-tax profit £335m and EPS of 218p (from £246m and 157p in 2014).