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Housebuilders have had a good year, after the government’s decision to provide new help for first-time buyers boosted demand for new homes. Last week we had upbeat news from Persimmon and Taylor Wimpey, and Bovis has followed this trend, cementing its position as one of the leading housebuilders in the south-east.
Net reservations are up by 40% in the first six months of the year, giving the company a firm foundation upon which to expand. Sales growth has been even better in the second quarter than in the first, and the company anticipates an improved return on capital for the rest of the year.
Having seen its shares gain over 40% this year, the company is now perhaps rather more of an expensive proposition than was the case six months ago. A price-earnings ratio of 24 is certainly not cheap and Bovis will have to keep the positive updates flowing if it is to avoid disappointing shareholders. That said, with the UK economy showing signs of growth, it may well be that the company’s share price has not hit the roof just yet.