Broker view: Barratt is a ‘hold’ on Q2 results

24th February 2016

img

As Barratt Developments reports its Q2 results Helal Miah, investment research analyst at The Share Centre, explains what they mean for investors…

Investors will be cheered by Barratt Developments’ comments on the UK housing market today, with the group saying it remains in a strong position due to improved mortgage availability and Government support.

This has subsequently allowed the company to increase the number of completions in the first half of its financial year by 9.4%. Investors should also appreciate that profit before tax increased by 40.3%, helping to lift the interim dividend 25% to 6 pence per share. Furthermore, ‘Return on Capital Employed’, the measure of how well the business is deploying the capital in its business’, rose 3.9% to 25.5%.

The shares trade at a reasonable 10.3x forward price to earnings ratio, in line with the sector. While we continue with our hold recommendation on the stock, we would not discourage investors from looking further at Barratt’s after a strong set of results and a solid start to the second half. However, our preferred stock for investors interested in the sector is Taylor Wimpey.

 

Leave a Reply

Your email address will not be published. Required fields are marked *