Financial Trading Blog

Stock of the day 15/09/2015 – Galliford Try PLC




Can its stellar run continue with its full year 2015 results on Wednesday?

After starting the year at £12.45 there haven’t been many moments this year where Galliford Try has stalled. February brought the company’s first big boost, as its half year report showed record revenue of £1 billion, up 35%, alongside a 12% jump in pre-tax profits to £42.5 million. The cherry on top was an increase in its interim dividend to £0.22, an investor-impressing leap that helped it climb to a then-all time high of £15 by the start of March.

Galliford Try PLC Chart September 2015
(Source: IT-Finance.com 15/09/2015)

Things cooled somewhat as the UK election approached, and bar a dip to £14 at the start of April Galliford Try didn’t really stray too far away from the £15 level. That changed after the results were announced; the Tory win was, of course, an injection of growth. However, the real stock-mover was its May trading update; the company confirmed the purchase of Shepherd Homes through its Linden Homes branch, as well as an increase in its order book to £3.3 billion compared to £3.2 billion the year before.

This reignited the stock’s growth, and by the start of July had reached £17.50, yet another all-time high. Its full year update at the start of the month got someway lost in the market-wide Greek fracas, but nevertheless showed a strong outlook for its upcoming official full year report. The average price of a Linden Homes house rose 7% to £327,000, it reaffirmed that its pre-tax profits would be to the under end of £105.9 million to £113 million, and a 13% increase in its total landbank to 15,750 plots.

This saw the stock soar to £18 for the first time by the middle of August, aided not only by that impressive update but the news that the company had secured a £1.5 billion smart motorways contract from Highways England. Galliford Try is at a current trading price of £17.95 (IT-Finance.com, 15/09/2015).

In terms of its full year results on Thursday, analysts are broadly expected the figures to be in line with what the company itself promised in July; that means up to £113 million in net profit compared to £95.2 million in 2014, a 25% jump in revenue to £2.2 billion and a huge increase in its order book from £1.4 billion to £3.5 billion following last year’s acquisition of Miller Construction.

Galliford Try has a consensus rating of ‘Hold’ with an average target price of £17.19.


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