Bellway Share Price Forecast August 2021 – Time to Buy BWY?
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Shares of residential property developer Bellway (LSE: BWY) are in the green today after the company released trading results for the latest period. BWY shares closed on 10th August (4:35 pm GMT+1) at £3,352 with an uptrend of 1.27%. Many investors believe that Bellway is one of the top UK shares primed for growth. Let’s find out whether they are true.
Bellway – Technical analysis
As indicated by the financial statement released by Bellway, the company has a total market cap of £4.081 billion with total assets worth £4.212 billion. Revenue for 2020 was at £2.23 billion with a profit margin of 8.67%. This is a major decrease from 2019’s revenue of £3.21 billion.
Oscillators for Bellway such as Stochastic %K (14, 3, 3)(83), Commodity Channel Index (20)(143), Average Directional Index (14)(18) and Awesome Oscillator (10) are pointing towards a neutral action. Moving averages such as Simple Moving Average (20)(3278), Exponential Moving Average (30)(3311), Simple Moving Average (30)(3287) and Exponential Moving Average (50)(3339) are pointing towards a buy action.
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Recent Development
Housebuilders in the UK have taken advantage of a surge in demand for homes which were fueled by the government’s stamp duty holiday, low-interest rates and the government-backed mortgage guarantee scheme introduced in March. This house price boom was helping the company tackle the cost of building homes where there were labour shortages due to self-isolation requirements.
Bellway announced back in March this year that it would restart dividend payments at the rate of 35p per share. The company took the decision after reporting record revenues of £1.7 billion for the six months to January 31st. It released a trading update yesterday(August 10th) which indicated that the company has delivered a strong performance with revenues approaching 2019 levels. Housing revenue increased by over 40% to reach more than £3.1 billion, which is only 2% below that of 2019. Housing completions increased by almost 35% with private reservation rates reaching 169 per week. It also achieved net cash of £330 million, thereby strengthening its balance sheet.
Perhaps the biggest highlight of this trading update was the company’s record forward sales position, reaching an order book of 7082 homes, which is an increase from what it achieved in 2019 and 2020. The positive nature of the trading update is the main reason why Bellway is primed for growth. The company will continue its growth recovery in parallel to the overall U.K. economic recovery.
Should You Buy BWY Shares?
With BWY shares, investors have two main primary concerns. The covid-19 pandemic increased the cost of raw materials which has affected housebuilders in the United Kindom. The rise in cost could impede the company’s investment viability and growth as it negatively affects sales figures and profit levels. The second concern is the new virus variant which could result in further restrictions. This can seriously hamper Bellway’s growth and progress by putting limitations on its building sites, which in turn would affect its bottom line.
Overall Bellway displays traits that are common with a company that is primed for growth, despite not being the biggest player in the sector. As an investor, one should focus mainly on its performance and track record which are all positive. On top of that, the company operates in an industry that is in the midst of one of the most burgeoning demand periods that it has experienced. So considering all of the points, BWY shares are certainly worth adding to one’s portfolio at the moment.
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