Stock of the day 08/10/2015 – Bellway PLC

Like its housebuilding peers Berkeley Group and Galliford Try, Bellway has been one of the best performing stocks for spread-betters in 2015.

Can its block(or is that brick?)buster 2015 continue with its full year figures next Tuesday?

A strong 2014 had left Bellway at £19.39 when the year began, only 30p below the all-time high it had hit at the start of December. A dip to £17 in the middle of January was short-lived, and by the end of the month the stock had stuck its head back above the £18 mark. It was Bellway’s February trading update, however, that really got its year underway; a 25% jump in off-plan home sales for its half year ending January 31st, totalling £925 million, alongside a near 24% increase in home completions in the north of the UK, put the stock on track to reach £20 per share for the first time in the company’s history by the start of March.


(Source: IT-Finance.com 08/10/2015)

Bellway loitered around this level for the rest of the month, with a half year report at the end of March helping to keep the stock in its £19.50 to £20.50 trading bracket as the company announced a 53% rise in pre-tax profits to £158.9 million and a 56% jump in its dividend to 25p per share. Yet pre-UK election jitters managed to dampen investors’ reactions to this news, with Bellway sporadically hitting £19 in the run up to the results.

However, as is well told by now, the Tory win did wonders for the housebuilding sector; a 5.5% surge on May 8th put Bellway above £21 for the first time, with the post-election goodwill seeing a sustained swell that lasted until the start of June, culminating in the stock grazing £24. A bit of profit-taking initially pushed Bellway lower following a June interim statement that saw a 22% rise in the company’s order book year-on-year, only for the stock to resume its run and hit £24.50 by the start of July.

The Greece-inspired tumultuous trading of July saw Bellway ping-pong between £23 and £24 for the rest of the month, before its August trading update, showing a record 7752 home completions for the year ending in July, sent the stock above £25. August’s Chinese madness then pulled the stock back down to £23, only for Bellway to soar at the start of September, reaching a new all-time high of £26.20 by the middle of the month.

Choppy trading for the rest of September and start of October took Bellway away from its highs, leaving it at a current trading price, and 6 week low, of £24.37 (IT-Finance.com, 08/10/2015). However, with analysts expecting a 17% increase in full year revenue to £1.74 billion alongside 40% rise in adjusted net income to £268 million, there is every chance that Bellway will soon be resuming its record-breaking run.

Bellway has a consensus rating of ‘Buy’ with an average target price of £26.01.