Will Balfour Beatty plc’s Share Price Outperform Persimmon plc, Taylor Wimpey plc, Berkeley Group Holdings PLC And Bovis Homes Group plc After Results?

Does the Balfour Beatty plc (LON:BBY) (LSE:BBY.L) share price have more investment appeal than those of Persimmon plc (LON:PSN) (LSE:PSN.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L), Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L) and Bovis Homes Group plc (LON:BVS) (LSE:BVS.L)?

Balfour Beatty plc
Balfour Beatty plc

The share price of Balfour Beatty plc (LON:BBY) (LSE:BBY.L) has dropped 0.9% today after it released 2016 results. Balfour Beatty’s order book increased 15% to £12.7 billion in 2016, although this was a rise of 4% at constant forex. Its underlying revenue was 4% up as reported, and 3% at constant forex, at £8.5 billion.

Balfour Beatty’s share price could get a lift in my opinion from the fact it returned to profit following 2 years of losses. Its underlying profit from operations in 2016 was £67 million. In H2, UK construction returned to underlying profitability. I think this is more evidence of the impact Balfour Beatty’s strategy could have on its share price. I feel the company is gradually moving towards improving financial performance under its current plan.

Balfour Beatty’s Build To Last strategy highlights include significantly exceeding its 24-months Phase One targets, with £439 million cash in and £123 million cost out. It has simplified its business, with non-core assets exited and improved its risk management and order book due to strengthened governance.

The company looks ahead to what it believes are favourable medium and long term market outlooks. It has recommended a final dividend of 1.8p per share to give a full year dividend of 2.7p per share.

In the last 6 months, the share price of Balfour Beatty has risen 0.5%. This is behind the share price rises of other construction companies such as Persimmon plc (LON:PSN) (LSE:PSN.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L), Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L) and Bovis Homes Group plc (LON:BVS) (LSE:BVS.L). Berkeley’s share price has moved 14% higher, Persimmon is up 17%, Bovis is up 5% and Taylor Wimpey’s share price is 27% firmer.

In my opinion, Balfour Beatty has investment appeal in the long run. I think it still has some way to go with its turnaround plan, but is making good progress judging by today’s update. However, I think there are lower risk opportunities elsewhere within the construction industry, such as through Persimmon, Berkeley and Taylor Wimpey. Therefore, I think Balfour Beatty is one for my watch list, rather than buy list, this moment in time.

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