More on Barratt
Barrat: H1 results
Barratt, the housebuilder, reported a 5% increase in turnover (to £1,148.2m) and a 20% increase in pre-tax profits (to £171.1m) for the half year to December 2004. The figures look fairly solid; UK housebuilding operating margins increased to 14.3% (2003: 13.3%), completions rose to 6,866 (2003: 6,705) and average unit selling price rose to £165,600 (2003: £161,700). Even more impressive was the forward sales figure which rose 20% to £1bn (2003: £833m), which effectively secures 90% of projected full year sales.
Barratt notes that sales activity ‘moderated’ in the period as the market “adjusted to more modest price rises” and a “normal level of activity”. This indeed in the only real concern with this stock: the housing market has slowed but while the company hopes that “it will provide a more stable and sustainable market for the future” we are not as optimistic. The full order book will ensure growth this year but the medium term outlook is not as certain. The stock trades at 661.5p, on a prospective PE of 5.7×, at the lower end of the sector. The yield is 3.5%.
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