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Yes good to see it gaining some today. Let's wait to see what the 10th Feb and beyond brings us.
Rdw today's biggest gainer in the sector !
Vlad,
I see you're taking some flak today in the Telegraph online due to your stance on Fundsmith....
I did check out Mr Smith's compounding rate out of curiosity and I saw that the chap having a pop at you just earlier seems to be correct in that Fundsmith has compounded at 20% (well, 19%, but Iwouldn't want to be pernickety....) though that was up to February 2019 so I don't know what it now is to date and it may have slipped a tad for 2020...?
I'm continuing playing with varying timescales for share holder surplus (which seems to be a "Vladism", as I haven't come across it elsewhere and, checking with a few of my compadres on the blog, they hadn't heard of it either so hopefully not just me being an ignorant peasant..?) and I'm still thinking it has potential for another bearing on the all important book value weighting...
Don't know if you're interested in pursuing this as a conversation topic...? One or two of my lot would be, I think, either by email or on the blog or, failing that, here....
Strictly
Vlad,
I've just been having a play with shareholder surplus (SS) for Bellway and Redrow as that's been slightly different to how I've previously calculated relative value though to pretty much come to the same conclusions, I reckon.
So, I thought I'd run some numbers past you to see if you concur (setting the formula up for this on the spreadsheet was tricky, bit of trial & error, but I think I'm there now)...
I've used projected EPS for the three years 2021 to 2023 of 320p, 360p and 400p for Bellway which is higher than the scribblers but these are numbers that make sense to me in terms of ROE against other builders.
For Redrow, I've used scribbler numbers for EPS for the same period of 61p, 67p and 76p.
I've assumed one third of earnings paid in divs in each case, and I've averaged the progress for the percentage return so, as projected EPS grows each year, this does flatter the SS number a bit.
The upshot is that this shows both companies, Bellway and Redrow, on exact par, at an SS of 14.1% a year (as I've implied, that's against the current share price rather than a possibly higher one down the line - which is why I say the figures are flattered...)
As part of this, I've also re-delved into the B share wheeze that Redrow undertook in 2019, and which I think I've mentioned elsewhere lost them a brownie point with me, and I'm happy now with their past track record which, for the past eight years on this measure, shows better than Bellway's....
Working off the current price, so over eight years this is hugely flattering to both companies, but life's complicated enough and it's the comparison that is relevant to me for this not the individual precise numbers, and that gives an SS for Bellway of 22.8% and for Redrow of 28.2%
Of course, in its favour, Bellway has decades long consistency, top notch long term average ROE and class leading strength of balance sheet.
The upshot was that I improved Redrow's weighting today to zero, which puts it on par with Bellway, which has prompted a bit of smugness on the blog as there are others who always considered Redrow should be on par so, okay, get over it, they were ahead of me on that...!
Anyway, the further upshot was that I moved a bit of Bellway, and all my Crest, into Redrow today and am now about one third each Bellway, Inland and Redrow whereas yesterday I was only 11% Redrow.
Strictly
I like to assess businesses in terms of the shareholder surplus generated as a percentage of market cap. This is a far more reliable metric than say PE or PEG or even debt/cash adjusted Neff total return ratio, for the simple reason that earnings, after dividend deductions, frequently don't make it through to growth in tangible balance sheet equity, i.e. earnings can be grossly misleading.Shareholder surplus is calculated by taking the forward yield and adding it to the average annual growth in tangible balance sheet equity over the previous 4 years. This sum is then expressed as a percentage of the current market cap. Clearly the shareholder a surplus is not the only factor to consider in assessing stocks, but it is a very robust starting point.Redrow generates a shareholder surplus of around 13% relative to current market cap. This is less than half a fair price for Redrow. Business metrics are some of the best in the sector as well, certainly not cheap for any good reason that I can see.Vlad
I second that my friend
Hi all,
Looking to get in here, and definitely looks undervalued. What has caused the recent drop over the past few weeks - is it simply lockdown woes? Looks like it may have found it’s bottom
Redrow and Barratt prices were neck and neck at the beginning of 2020 and their results for the period ending June 2020 were very similar. In the current year rdw is likelt to beat bdev imo. Redrows shares are likely to catch up with Barratt in February imo.
Before the pendamic on 04-Feb-20 UBS had a target of 1030p for Redrow. The shares were trading ar around 850p at that time. This year RDW is likely to report higher profits, so hopefully the share price will be higher,fingers crossed.
Redrow said in their AGM trading statement on 6th November.
"Homes turnover for the four months to October was up 48%"
RDW are likely to report even better results than Barratt IMO. EPS should be over 50p for the first half according to my calculations. DYOR.
Great set of results from BDEV today and a divi to be resumed. I expect the same sort of results here on the 10th Feb and hopefully a divi announced at the same time too. Not much not to like about this company at this moment in time. Onwards and upwards I feel as we approach the 10th Feb.
Trying to get on the property ladder has become one of people’s top priorities following a year of lockdowns and restrictions, a new survey has shown.
https://www.inyourarea.co.uk/news/pandemic-forces-people-to-make-big-life-changing-decisions-survey-shows/
UK lenders approved most mortgages since 2007 in Nov - BoE
https://uk.reuters.com/article/health-coronavirus-britain-economy/uk-lenders-approved-most-mortgages-since-2007-in-nov-boe-idUKS8N2IB03R
RDW should report earnings per share well over 50p for the first half, to be announced in early February according to my calculations. DYOR
Housing Secretary Robert Jenrick announced the government’s plans for housebuilding across England. This will regenerate numerous cities, especially those in the north and Midlands.
The government’s plans will encourage more housebuilding in the 20 largest cities and urban centres in England. The plans will regenerate these cities and bring housing to areas where demand is outstripping supply.
The plans set out for delivering more homes across England are also expected to boost local economies through supporting jobs in the construction sector and revitalising high streets with footfall from new residents. This will especially help areas struggling to recover from COVID-19.
https://www.buyassociation.co.uk/2020/12/29/government-plans-for-housebuilding-set-to-regenerate-and-boost-cities/
At the beginning of 2020 RDW was trading at a higher price than BDEV. RDW has produced better profits than BDEV and has higher tangible book value per share. This share has some catching up to do.Rdw is likely to trade at higher price than Barratt after the results are announced in the first week of feburary IMO.
Redrow has almost always beaten the brokers forecast by a very big margin. It should produce well over 50p per share in the first half and more than a pound for the full year ending June 2021 according to my calculations. DYOR.
" Pricing has remained firm with modest gains in the regions. The average selling price of private reservations for the first 18 weeks was 2% up on last year at £396,000 (2020: £389,000 excluding the PRS sale).
Homes turnover for the 18 weeks to 30 October 2020 was 48% up on last year at £657m. This strong performance has not depleted the total forward order book which currently remains close to record levels at £1.5bn, a 10% increase on this time last year. "
Redrow likely to produce bumper results for the first half. Interim results expected to be announced in the first week of Feburary.
https://www.insidermedia.com/news/wales/redrow-anticipating-strong-2021
Redrow anticipates a strong 2021 and outlines its views on buyer demand and preferences over the coming 12 months.
https://www.showhouse.co.uk/news/redrow-makes-market-predictions-for-2021/
2227......Not sure about 700 by end of Jan but I expect all builders to perform well this year. I bought in here recently and long term hold of TW. and I will be looking for an uplift of 50% before I even consider selling. Nice to have a quiet BB where only sense is spoken and no name calling being done. LSE seems to be full of children these days throwing their toys out of the cots if someone posts some negativity. Good luck and have a great Christmas.
Sorry I meant to say 700p before the end of January 2021 IMO.
Sorry I ment to say 700p before the end of January 2021 IMO.
If a deal is agreed with the EU, Redrow could break through 700p by the year end and much hogher by spring IMO.