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Bellway share price: 3 things we learnt from its latest trading update

The British homebuilder remains on track to meet its full-year targets even with downward pressure on margins, with the business favouring ‘disciplined’ investment at the expense of growth.

In its latest trading update, Bellway reassured investors with another strong performance given the myriad of headwinds the sector is facing and remains on track to meet its full-year expectations by revising its strategy.

Bellway benefits from ‘disciplined’ approach to investment

Bellway recorded another successful trading period driven by disciplined investment at the expense of growth that has seen sales grow and allowed the homebuilder to build on the foundation laid by last year’s performance.

‘Customer satisfaction remains high and this has helped secure our position as a five‐star home builder for another year,’ Bellway CEO Jason Honeyman said.

‘Going forward, we are on track to deliver further earnings growth this financial year and beyond that, our strong balance sheet ensures that Bellway is in a good position to continue its long-term growth strategy.’

Bellway share price slides despite stable performance

Despite the homebuilder recording a relative stable set of results considering the impact that Brexit is having on the sector, Bellway’s share price has fallen in the wake of its latest trading update.

Bellway’s stock has fallen by 2% to £27.80 a share in the days following its recent trading update, with investors expressing concern over homebuilders’ costs outpacing growth in UK house prices.

'Building costs are growing faster than house prices and this is putting pressure on margins,' AJ Bell investment director Russ Mould told ThisIsMoney in an interview.

'Otherwise the company's update suggests trading has robust foundations with the company selectively investing in land while reporting strong sales and a big order book. It also has a significant net cash position.'

Bellway outlook remains positive

Bellway’s forward sales rose by 2.7% to 6,312 homes though the value of the order book is declined slightly compared with the same period a year prior to £1.64 billion, down from £1.7 billion.

The modest slide in value reflects the planned growth in lower value social completions this year and is in accordance with previous guidance.

‘This strong sales position ensures that Bellway is well placed to meet the Board’s expectations with regards to earnings growth in the current financial year,’ the company said.

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