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It’s been a tricky few weeks for the FTSE 100 and FTSE 250‘s housebuilding shares. Bellway (LSE:BWY) for example has sunk 32% in worth over the previous month, reflecting worries over future rates of interest.
In truth, it’s down an extra 10% on Tuesday (24 March) after releasing first-half buying and selling numbers. At £19.21 per share, its price-to-earnings (P/E) ratio has slumped to 11.5 for this monetary yr (to July 2026). For monetary 2027, this drops to 9.5.
The query is, are Bellway shares now irresistible at as we speak’s costs?
What’s occurred as we speak?
The FTSE 250 builder’s falling furiously after slashing full-year forecasts. Chief govt Jason Honeyman commented that “the continuing battle within the Center East heightens the danger of each inflationary price pressures and an impression to buyer demand, and we have now already seen volatility return to the mortgage market.”
Underlying working revenue for this monetary yr’s now tipped at between £320m and £330m, under dealer estimates of £334m. The enterprise additionally trimmed the underlying working revenue margin goal to 10.5%, down round half a proportion level.
For the primary half, Bellway really carried out fairly strongly. Revenues of £1.5bn have been up 6.3% yr on yr, and barely forward of dealer estimates as completions and promoting costs rose.
Underlying working revenue elevated 1.5% to £159m, although this wasn’t as spectacular. The underlying working revenue margin dropped to 10.5% from 11%, inflicting the underside line to overlook forecasts.
Nonetheless, Bellway’s first-half efficiency was largely sturdy. And it inspired the enterprise to boost its full-year completion goal to 9,300-9,500 houses from 9,200 beforehand.
Weak point showing
Markets are ahead wanting, so it’s no shock buyers selected to concentrate on Bellway’s lowered revenue expectations going forwards. And particularly as Bellway is already exhibiting indicators of hassle.
As of 16 March, the builder’s ahead order guide was 5,311 houses, down 4.9% yr on yr. And its order guide worth was down 1.9% at £1.5bn.
Weekly non-public reservation charges per outlet since 1 February have additionally dropped to 0.7 from 0.76 in the identical 2025 interval.
Bellway has mentioned “the scenario within the Center East has not had a fabric impression on buying and selling” in the meanwhile. However buyers are asking, how dangerous might issues get as rates of interest and mortgage merchandise turn out to be much less beneficial for consumers?
Are Bellway shares a possible purchase?
As I say, Bellway’s share value drop leaves it buying and selling on rock-bottom P/E ratios. However that’s not all — the builder’s price-to-earnings progress (PEG) ratio stays under 1 for each the following two monetary years. At 0.3 and 0.4, in truth, it’s properly under inside worth territory.
In the present day’s value weak point has additionally pumped the dividend yield to a chunky 3.6% for this yr. It rises to 4.2% for fiscal 2027.
So is the FTSE 250 inventory a prime worth share? I feel it’s value severe consideration, as from a long-term perspective the housing trade outlook stays sturdy, pushed by authorities coverage and the UK’s booming inhabitants. However buyers must be ready for some severe volatility within the meantime.
