- FTSE 250 housebuilder exceeds own forecast for housing completions
- Management also forecasts further 5% increase for year to July 2026
- Company buys most land plots for three years as it positions itself for recovery
- Outlook statement hints at a share buyback when full-year results are released in October
“The share price is not showing any great interest, perhaps owing to wider fears about the pace of interest rate cuts from the Bank of England and the overall trajectory of the UK economy, but Bellway’s trading update for the year to the end of June offers some grounds for optimism,” says AJ Bell investment director Russ Mould.
“Completions for the year just ended are higher than forecast and management expects a further increase in the next twelve months, a view backed up by more active land buying and higher forward sales.
“Bellway’s forward sales are 8% above the levels seen a year ago, at £1.5 billion. That only covers around half of the £3 billion in revenues that analysts expect for the year to June 2026, but it is still the second consecutive increase in the order book, so that looks to be a step in the right direction.
Source: Company accounts. Financial year to June.
“Helped by that trend, and an increase in the average sales per outlet per week figure across the year to 0.57 from 0.51, management expects a 5% increase in completions in the year to June 2026. That will take the total to around 9,000, up from the 8,749 total recorded in the financial year just ended, a figure which exceeds management’s initial expectations of 8,500. Whether that pace of growth is enough to help the Labour government reach its goal for housing starts is another matter, but Bellway shareholders will also be pleased to see a 3% increase in average selling prices, too, to help defray higher input costs. Again, whether buyers are so pleased about that remains to be seen, but for the moment there seems to be demand, judging by the increase in completions and the backlog.
Source: Company accounts, management guidance for 2026E. Financial year to June.
“Bellway is certainly positioning itself for better times ahead. Although we have not yet seen the full set of accounts for the year to June 2025, Bellway built inventory in each of the prior four years, either by accident or design, with the result that the company had over 850 days’ inventory as of June 2024.
Source: Company accounts. Financial year to June.
“An uptick in demand, and completions, would allow the company to sell that housing stock, and not just boost sales and profits.
Source: Company accounts, Marketscreener, consensus analysts’ forecasts
“It should also release cash, too.
“Bellway already has a net cash position on its balance sheet, but the additional liquidity could permit management to review the builders’ capital allocation policies, and what it does with any surplus cash, once all of its investment needs are met.
“Bellway cut its dividend in the year to June 2024 and has previously run little by way of share buybacks. However, the outlook statement hints at a review of how cash is allocated, and the outcome is due alongside October’s full-year results statement.
Source: Company accounts, Marketscreener, consensus analysts’ forecasts
“Providing the UK economy does not turn turtle, and take housing demand down with it, Bellway may just be getting ready for a share buyback scheme, which could make sense at a time when the shares trade below their last stated tangible net asset, or book, value per share. Buying back stock when it is trading below book value should be automatically value accretive, as it is the equivalent, in Bellway’s case, of buying pound coins at barely 85p apiece.”
Source: Company accounts, Marketscreener, consensus analysts’ forecasts, LSEG Refinitiv data
