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Thanks for the thoughtful and interesting reply.
The short answer is no I wouldn't buy them now. My main house builder is BKG though it swings a lot and at £44 and up you need to buy a lot to make anything much on those. Pays a handsome dividend though.
Yes I am in the next county but just over the bridge.
I wouldn't have bought Vistry either!
Good luck and stay safe
Kernowlad,
Well, I'll try not to pass any rude comment here on Galliford, then ~ or Vicky Pollard, as they are referred to in our blog elsewhere ~ but they have been a bit of a nightmare since an initial promising start coming out of the credit crunch.....
Their reality check earnings, the process for obtaining such having been described in an earlier comment here today, have been markedly different overall to their declared earnings per share, and this exacerbated their situation of already paying out too much in dividend (which is what Crest were guilty of coming up for covid, but I trust they'll sort that - especially as I've got a lot of Crest shares!) and, as you're probably well aware, they ended up having to do a rights issue right in the sweetest part of the cycle....
Now they're just an engineering business (I think?), maybe that'll change....? But I'm not holding my breath on that and anyway, as the moniker implies, I only invest in house builders and apart from that I much prefer to go for the easy questions on the exam paper....
By comparison, I've got numbers on Bellway ~ the company I referenced earlier today as it's my benchmark share ~ going right back to 1983.... I've only been managing my own stuff since 2000.... and since the start, 1983, taking an overall view, Bellway haven't put a foot wrong, IMO - over the past 37 years, they've achieved an average return on equity of 16.2%...
I use the word "awesome" sparingly, but it applies here....
Over that time, Bellway have turned a 51p BVPS into 2,372p and paid out a further 954p in dividends... if it sounds like a sales pitch, it's because I'm a big fan of them.... but DYOR, and all that... if you scroll back through old comments of mine here on LSE, and go back far enough, you'll no doubt see that I've written plenty about them here...
Good luck with Galliford, then.... if it's any help, perhaps the question to ask yourself is: "If I didn't already have Galliford, would I buy them at today's price?"
Because, if you wouldn't, any tax considerations aside, it surely leaves you pondering why you haven't sold them....?
Regardless of whether or not you're nursing a loss, the market doesn't give a monkey's, does it, and is highly unlikely to price Galliford kindly from here for you...
I speak as someone who has serious previous on this, so I'm not trying to lecture you on this... I got it very badly wrong with Barratt in the credit crunch.... so much so that I had to sell up and move house because of it.... down to Devon, as it happens, God's own land, and the next county to you by the sound of it...?
One of my three golden rules now is "Don't ever invest in companies that are heavily leveraged, no matter how promising they look...".
Amen to that, still...
Strictly
Strictly Bricks
The market seems to agree with you rather than the more positive line though I didn't expect this fall on these numbers; in fact I was quite cheered when I read them. I am in here accidentally as I had and still have Galliford Try who sold Linden to Bovis and am way under water at about one third of my entry price. Long way to go I think.
fatprofits
"Appreciate the view, are those metrics for VTY going to look markedly different next year,
Following the integration etc?."
I have no idea about that..... I just reckon the Ghost of Christmas past is a more reliable creature than the Ghost of Christmas future...
So I guess we'll find out about that when the future has become the past....?
In the meantime, if one goes with Warren Buffett's idea of waiting for the perfect pitch, personally I wouldn't want to pitch at Bovis right now ~ even if the price seemed good, which to me it doesn't ~ when what is there is largely hope, spiel and surmise...?
But, of course, DYOR and all that, and mine is just an opinion, albeit based on firmed up past numbers...
Strictly
Appreciate the view, are those metrics for VTY going to look markedly different next year,
Following the integration etc?.
VTY now have a sizeable partnership division, so im guessestimating the market may see that
as less cyclical, as we slide in to recession.
There's the story and then there's the numbers and, of the two, I prefer to rely on the numbers....
I don't wish to pee on anyone's bonfire, and especially as I don't recall ever commenting here on the Bovis share chat before, so I suppose that makes me the cheeky new upstart, so I'll just put some numbers out instead.
But firstly, and perhaps controversially, I tend to ignore declared EPS figures, and instead use BVPS, adjusted for goodwill and intangibles, at start and finish of the accounting period, and adjusted for any dividends paid, in order to find out what the true earnings were based on increase in tangible value.
Because it's that which is going to count when it comes to calculating PBV, and I consider PBV to be a steadier measuring stick than year to year earnings given the seriously cyclical nature of house builder profitability based on any long term historical record...
Anyway, on that basis, balance sheet value of Bovis as at 30/6/20 being £2,118.831m less £736.305 intangibles (in various guises) gives net balance sheet of £1,382.526m divided by 217.828m shares in issue at the end of the period = 634.69p BVPS.
Calculated on the above basis, the brought forward BVPS as at 1/1/20 was 840.17p, so that gives a loss calculated as above of 205.48p.
If any of the above numbers are wrong, I'm happy to stand corrected - but the above no doubt seems way out of whack with the story otherwise presented...?
So, perhaps take a longer perspective to see if it seems valid.... I'll leave people to decide for themselves...
Including an estimated figure for 2020, and using the above process for EPS and book value each year, Bovis's average return on equity for the years 2013 to 2020 inclusive is 5.7%.
This compares to Bellway - the share I use as a benchmark - which has average ROE for the same period of 18.9%, i.e. more than three times as much as Bovis.
And this has been reflected in share price performance.... since 2013, with divs reinvested on the day received, Bovis has returned investors 45% overall whereas Bellway has returned 186%.
Go back even further, Bovis average return on equity 1998 to 2019 is 12.2% compared to Bellway's 17.4%....
The gap perhaps seems somewhat smaller, but compounding impacts more on the difference over the longer time scale....
In 1998, Bovis had a book value per share of 185p, pretty much the same as Bellway's at 183p in that year.
However, scroll forward to 2019, and Bovis's BVPS is then 855p compared to Bellway's 2,373p.
And yet, despite all the above, the two of them are currently selling at pretty much the same price to book value....!
Wonderful thing, the market...
Strictly