Despite the housebuilder reporting a rise in profits, the shares still dropped in early trading due to cautious comments.
Barratt Developments (BDEV) shrugs off sector uncertainty
- While investors welcome 6% rise in the dividend, shares drop 2% in early trading as market notes underlying note of caution.
- Company gives a nod to potential changes in the operating environment in 2020 and beyond.
- Despite shares performing well so far this year, political and economic uncertainty means shares remain no better than a ‘Hold’.
The final results issued this morning by the housebuilder are largely in line with market expectations, but trading since 1 July has been slightly weaker. House completions rose 1.6% to 17,856 and pre-tax profit rose 9% to £909.8mn thanks to an increase in the operating profit margin of 80 basis points. The net cash position dropped back slightly but the all-important dividend rose 6%. However, forward sales were slightly lower in value and the company talked about ‘potential changes in the operating environment in 2020 and beyond’.
The market noted that caution and the shares dropped 2% in early trading. While the figures themselves appear solid, big investors are generally more forward-looking and so the slight dip in net reservations and cautious comments on future trading are given greater importance.
Our view on Barratt Developments - Hold
The shares have performed well so far this year but given the political and economic uncertainty at present they are no better than a ‘Hold’ for investors seeking a balance between income and growth and are willing to accept a medium to high level of risk.
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