Join our community of smart investors

Bovis back on track

And it is well placed to achieve its growth targets
March 1, 2019

The new management team at Bovis (BVS) worked wonders in the year to December 2018, helping bring an end to the housebuilder’s previous reputation as a serial underperformer.

IC TIP: Hold at 1061.5p

Operating margins climbed from 12.5 per cent to 16.4 per cent, and with earnings per share up by nearly a half, the return on equity employed rose from 13.7 per cent to 19.3 per cent. Shareholders were also rewarded in September with a special dividend, which together with a rise in the ordinary dividend means that the shares are yielding nearly 10 per cent.

Units sold rose from 3,645 to 3,759, on target to reach 4,000 by 2020. There was also a special emphasis on improving build quality, which resulted in a 4-star customer satisfaction rating. Average selling prices were flat at £273,200, and while labour and material cost inflation were up by 3 per cent, this was offset by reduced customer care costs and operational improvements.

Trading in the new year has started well, with sales per site per week up 15.7 per cent from the previous year – and forward sales already make up nearly half of projected revenue for 2019.

Analysts at Numis are forecasting pre-tax profits for the year to December 2019 of £190.3m and EPS of 116p.

BOVIS HOMES (BVS)   
ORD PRICE:1,061.5pMARKET VALUE:£ 1.43bn
TOUCH:1,060.5-1,061p12-MONTH HIGH:1,260pLOW: 819p
DIVIDEND YIELD:5.4%PE RATIO:10
NET ASSET VALUE:787pNET CASH:£127m
Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20140.8113378.635
20150.9516095.440
20161.0515590.145
20171.0311468.047.5
20181.0616810257*
% change+3+47+49+20
Ex-div:28 Mar   
Payment:24 May   
*Not including special dividend of 45p paid in November 2018