Will Shares In Barratt Developments Plc Outperform Persimmon plc, Berkeley Group Holdings PLC, Taylor Wimpey plc And Bovis Homes Group plc After H1 Update?

Are Barratt Developments Plc’s (LON:BDEV) (LSE:BDEV.L) shares more appealing than those of Persimmon plc (LON:PSN) (LSE:PSN.L), Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L) and Bovis Homes Group plc (LON:BVS) (LSE:BVS.L)?

Barratt Developments Plc
Barratt Developments Plc

Shares in Barratt Developments Plc (LON:BDEV) (LSE:BDEV.L) have risen 2% today after the release of its H1 results. They show completions outside of London are at their highest level in 9 years, with London completions in line with the planned build programme. Barratt expects significant uplift on wholly owned sites in H2.

H1 PBT was 8.8% higher at £321 million, with ROCE up 1.5 percentage points to 27%, which reflects Barratt’s fast build and sell model. According to the company’s update, Barratt has also maintained industry-leading customer satisfaction and build quality. This comes after Bovis Homes Group plc (LON:BVS) (LSE:BVS.L) reported it will begin a process of review in order to improve and address customer satisfaction issues.

Barratt has a record forward order book, with total forward sales 17% higher at £3,018 million. Net private reservations per active outlet per average week are 0.77 versus 0.76 in H1 2015. Given the positive lending backdrop and strong consumer demand, the company’s shares could perform well in my view.

In the last 6 months, shares in Barratt have risen 13%. That’s ahead of other housebuilders including Persimmon plc (LON:PSN) (LSE:PSN.L), Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L) and Bovis. Persimmon shares are 12% higher, Taylor Wimpey shares are 11.5% up, while Berkeley shares are 12% higher and Bovis shares are 10% down following its profit warning.

In my view, the UK housebuilding sector has long-term investment appeal. I’m not sure 2017 will be a good year for the sector, though, as UK consumer confidence could fall this year in my opinion. I’m concerned about the potential implications of Brexit on the sector in the short run. But Barratt’s share price could be a top performer further down the line. It seems to be doing well in terms of customer satisfaction and general performance, which I think gives its shares relative appeal at the moment for the long term.







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