Bellway Share Price Forecast December 2021 – Time to Buy BWY?

Shares of a residential property developer and housebuilder Bellway (LSE: BWY) are in the green today, currently trading at 3252p. The housebuilder reported a 35% increase in housing completions for its financial year ended July. Many investors are thus interested in the shares. The shares yield 4% at present which is one of the reasons many have bought the shares.

Bellway – Technical Analysis

According to the financial statement from Bellway, the market cap of the company is at £396.285 billion with total assets worth £467.68 billion. Revenue for 2020 was at £312.25 billion with a profit margin of 12.51% compared to £22.54 billion in 2019. In the financial period, Bellway acquired a record 19,899 building plots in the financial period. Management wants to increase construction by 20% over the next few years.

Oscillators such as Relative Strength Index (14)(53), Stochastic %K (14, 3, 3)(64), Commodity Channel Index (20)(68), Average Directional Index (14)(14) and Awesome Oscillator(45) are neutral. Moving averages such as Exponential Moving Average (10)(3228), Simple Moving Average (10)(3220), Exponential Moving Average (20)(3220), Simple Moving Average (20)(3210) and Exponential Moving Average (30)(3224) are indicating a buy action.

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Recent Developments

Bellway is known as UK’s fourth-largest housebuilder which recently announced its preliminary results. Positive metrics include profit margins at 20% with revenues rising above 40% to reach £3.12 billion. However, revenues were down to £2.23 billion during the Covid-19 pandemic.  After initially cutting dividends to 50p last year, the company is now offering 117.5p as a proposed total dividend per share. While its still below 2019’s level, it till represents an increase of 135%. It has also announced its intention to return one-third of after-tax profits to shareholders via dividend payments over the next two financial years.

The shares have now breached the 3000p mark a while back after falling under 2000p during the pandemic. However, the share price is struggling to reach 4300p which is its pre-pandemic high. During the pandemic, Bellway acquired land by following a front footed approach, bringing up a record 20,000 sites in the year to 31 July 2021. The company is also aiming to take advantage of the government’s Help to Buy scheme expiring in March 2023 which will help them offer a more affordable mix of products.

Should You Buy BWY Shares?

Investors interested in Bellway should look at the present scenario of the UK property market. Higher steel and timber prices which arise due to a combination of shortages and soaring global demand can hamper housebuilders. The additional issue of labour shortages due to self-isolation requirements coupled with the issue of heavy goods vehicle drivers and unreliable fuel supplies are also present. All of this has resulted in Bellway’s material availability being under threat.

Demand for housing is vulnerable to a stalling economic recovery, something which the UK is experiencing at the moment. Higher monthly repayments will leave consumers less willing to take on mortgage debt which might happen due to higher interest rates. Buyers could be put off making huge purchases due to higher monthly repayments.

Some investors are impressed with the company’s strategic planning and its land bank. Investing in housebulders can also allow investors to gain extra exposure to the property market without buying a place. The company has the financial capacity to do so with more than £1 billion with cash on the balance sheet to fund further land acquisitions. But Bellway shares aren’t really worth adding to your portfolio at the moment.

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