A lack of guidance on margin performance in today’s trading update helps sink shares in the UK’s largest housebuilder Barratt Developments (BDEV). It falls 2.5% to 618.6p.

Barratt is the latest name in the sector to see a negative share price reaction to a fairly solid looking statement, suggesting sentiment towards housebuilders may be on the turn.

In its first half to 31 December the company completed 144 more homes, with its average selling price up 6.5% to £281,000; and its sales rate was flat at 0.68.

Forward sales were up 2% at £2.38bn, net cash is down from £196.7m to £165m but the company says it still plans to pay a special dividend of £175m in November 2018.

A lack of margin guidance is highlighted by Liberum as it reiterates its ‘sell’ recommendation and 575p price target.

Analyst Charlie Campbell comments: ‘Barratt is our least preferred housebuilder due to relatively low margins and as we see its dividends as least safe amongst the returners.’

He see better value in the sector in smaller growing businesses, citing Bellway (BWY), Galliford Try (GFRD), Gleeson (GLE) and Redrow (RDW).


Issue Date: 11 Jan 2018