Bellway (BWY) - which has been in the CISP since inception just over three years ago has had a trading update today. While not explicitly stated by them this appears to be of the in line to slightly ahead type. Based on the volumes and increased number of homes they expect to complete and the indicated margins I estimate that they should come in ahead of existing forecasts by around 2%. So we may see some modest upgrades or a small beat of the full year numbers when they are announced.
Thus it seems steady as she goes for this 5 star housebuilder (as measured by the Home Builders’ Federation Customer Satisfaction survey) as they continue to deliver excellent growth on the back of firm pricing, albeit with signs of slowing and help from the Government's help to buy scheme.
The rating on the shares remains around 7 to 8x and they offer a well covered 4% yield too. The growth in the market and their earnings and dividends over the last three years has helped the shares to nearly double while the rating has remained largely unchanged. Thus demonstrating the power of compounding from what many would write off as a dull, cyclical business - which it is, or because they fear an imminent collapse in the housing market. In the short term this is probably not enough to get the market excited as they are off this morning first thing. However, as it continues to score well and they continue to deliver the houses, profits, earnings and dividends, it will remain in the portfolio until the music stops.