Is Barratt Developments Plc set to post high returns despite Brexit risks?

Could Barratt Developments Plc (LON:BDEV) (BDEV.L) deliver an impressive growth outlook?




Barratt Developments Plc
Barratt Developments Plc

The Barratt Developments Plc (LON:BDEV) (BDEV.L) share price could be held back by Brexit risks in my opinion. The company could see investor sentiment come under pressure in the near term as confidence in the UK economy declines due to the Brexit process moving towards the final stages.

The company’s performance, though, remains robust according to my research. Recent updates from the housebuilder have suggested that it is seeing high levels of demand for its newbuild properties, with government policies such as Help to Buy and SDLT relief offering the potential for further profit growth over the medium term.

Even if Barratt does experience difficult trading conditions, I feel that it has the financial strength to overcome them. The stock has a large net cash position at the moment, and this could mean it offers resilient prospects even if the UK economy experiences a downturn. And with there being a major shortage of houses that is set to worsen as population levels rise over the coming years, the prospects for the company continue to be bright in my eyes.

In terms of its valuation, the stock seems to have investment appeal. It has a dividend yield of over 8% at the moment, which makes it one of the highest-yielding shares in the FTSE 100. Although that dividend yield figure includes special dividends, they appear to be sustainable at their current level in my opinion.

Since Barratt has a large land bank, it seems to be in a strong position relative to some of its sector peers. And with a high level of customer satisfaction, the company could enjoy relatively stable earnings growth over the long run.

Sure, it may not be a particularly popular stock in the near term. But in the long run it appears to offer investment potential which could allow it to outperform many of its FTSE 100 index peers.




About Robert Stephens 5138 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page