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The obsession of the housing market and the reality for shareholders in Barratt Developments

By Chris Bailey | Wednesday 8 February 2023

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

As the CEO of Barratt Developments (BDEV) observed during the conference call earlier today, the company’s half year numbers showed a “very strong operational performance”. Compared to a year ago, total home completions rose by 6.9%, adjusted profits were up by 15.9%, return on capital employed was up to 29.6% and, whilst net cash fell just over 14%, it was still just shy of £970 million. Happy days then for a leading housebuilder with a market cap of just over £4.6 billion today? So why are the shares, which are up about 1% today as I write, down by more than 25% during the last year? Is it something to do with the “difficult housing market” also talked about?
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