More on Countrywide
Countrywide: 2005 results
Countrywide, which bills itself as the UK’s largest estate agency and residential property services group, reported a 24% decline in operating profits for the year to December 2005. The results were broadly in line with the guidance provided earlier, which we have examined in more detail in our previous piece.
Operating profit dipped to £31.4m (2004: £41.3m) and pre-tax profits fell to £31.7m (2004: £40m).
On a more positive note, house exchanges rose to 85,106 (2004: 80,650) and average selling prices rose to £179,300 (2004: £173,200). The company said that there was considerable improvement in the market in the second half of the year, evidenced the improved year end pipeline of £64.3m (2004: £48.3m).
Predicting the outlook of the UK housing market is not an easy exercise (as Countrywide freely admits) but the fact that the housing market is at a peak is not in question.
Investors need to take a view whether they expect a ‘soft landing’ of house prices or a crash before venturing into the sector. Either way, given the uncertainty in predicting the market, the sector is not for the risk averse.
The share trades at 483.75p, on a prospective PE (2006 earnings) of 13.9x, at the upper end of the sector range, with an unimpressive yield of 2.4%.
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