Member Info for Josh95

Redrow' s(RDW) full-year results to June provided further evidence of the rude health of the housebuilding sector, delivering record profits and a doubling of the final dividend to 4p. Turnover breached the £1bn mark for the first time ever, with houses sold up 12 per cent to over 4,000. The return on capital employed was up from 18 per cent to 22.8 per cent, while margins at the operating level rose from 15.9 per cent to 18.5 per cent, exceeding its 2017 target of 18 per cent two years ahead of schedule. Cost inflation on the input side was running at around 5 per cent, but this was more than offset by a 13 per cent rise in average selling prices to £270,000. Land prices, meanwhile, were broadly benign, and the company acquired 5,892 plots, taking the total land bank to 18,216. Trading since the year-end remains robust, with the forward order book running at record levels. Private reservations secured in the first 10 weeks of the new financial year were 28 per cent ahead of last year's comparable period. Analysts at broker Peel Hunt are forecasting EPS of 50.3p in 2016, compared with 44.5p in 2015. REDROW (RDW) ORD PRICE: 494p MARKET VALUE: £1.83bn TOUCH: 494-496p 12-MONTH HIGH: 502p LOW: 249p DIVIDEND YIELD: 1.2% PE RATIO: 11 NET ASSET VALUE: 230p NET DEBT: 18% Year to 30 Jun Turnover (£m) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p) 2011 453 25 4.4 nil 2012 479 43 9.7 nil 2013 605 69 14.6 1 2014 864 133 28.3 3 2015 1,150 204 44.5 6 % change +33 +53 +57 +100 Ex-div: 24 Sep Payment: 13 Nov IC VIEW: At 494p, shares in Redrow have performed strongly this year and yet still trade on just 1.6 times Peel Hunt's forecast net asset value for 2016, compared with a sector average of 2.2 per cent. That looks too cheap. Buy.

Several points to note: 1. You are comparing PE ratio's from different time periods. You should use a TTM pe ratio to compare (Trailing Twelve Months). LSE doesn't give you this and simply calculated PE from the companies last set of full financial results so you are comparing Redrow's latest results to TW.'s results from six months before- a misleading comparison. You can go on another site and find the TTM pe ratio of TW. is actually around 15 or you can calculate it yourself by taking the full year EPS, adding on the first half 2015 interims and subtracting the first half 2014 interim eps. 2. Capital returns. Another point you are glossing over is both companies capital returns policies are different. Redrow pays a tiny dividend due to its stronger growth profile which is all well and good, but TW. on the other hand pays colossal special dividends and the share are trading cum dividend worth about 12p a share. You need to factor in this capital return, to reflect this 200-12 = 188/13= 14.4 For redrow: 497 - 6/44.5 = 11. Now we have more comparable pe's, adjusted for the different reporting periods and capital return policies. So why are TW's earning still rated at 14.4/11 = c. 30% more expensive? One factor is to do with the companies landbank, taylor wimpey has a much stronger consented landbank than redrow with about 6 years worth at current volumes. This compares to redrows c. 4.5 years worth at current volumes. Next we must also note the fact that TW. has an astonishingly strong strategic landbank from which it seeks to complete 50% of future completions from. This explains some more of the difference as TW. will theoretically be able to enjoy stronger margins than Redrow and continue to deliver better capital returns as Redrow will have to buy more expensive land to replenish its own stocks. A PE ratio is not always a sign of value for a company- a higher PE ratio for instance indicates that the markets are more bullish on a particular company's future earnings and thus are willing to pay more per £1 of earnings. There are other things you also need to consider such as capital structure. That being said, even after factoring in everything above Redrow, Bovis, Crest etc all look better value than TW./PSN/Bdev to me and that is the exact line Goldmine Sachs take in this article where they state their bullishness towards the midcaps: http://www.digitallook.com/news/broker-recommendations/crest-nicholson-and-foxtons-upgraded-as-goldman-hails-mid-size-housebuilders--858437.html So to answer your question, some of the difference in PE you are comparing is due to you comparing figures from different periods, part due to you not factoring in different capital return policies and other parts due to stronger asset bases. Another unexplained part however does indeed indicate better value at the midcaps which is why I no longer hold any of the big three and am spread across the midcaps and a couple of smaller/nich

Redrow Pe is indeed c. 11 at the moment, but this is no different really to sector peers e.g bovis, Inland, Bellway, crest all trading on forward pe ratios of about 10 for year ending 2015. Bovis 3% increase isn't an issue as the first half mix was more heavily weighted to lower margins social completions, a stronger mix in the second half with more privates and also more volum will result in EPS of over £1 and a pe of 10. Fallen out of favour due to weak ROCE and Margin growth but given the above these are temporary and will catch up as volumes increase. When they do the gap of 2.2/1.7 valuation on the price to book will have to close which will lead to an outperformance of c. 30% which perhaps explains Goldmine Sack's bullish 37% one year upside valuation. Until results are out though I think it will lag the sector. Crest, Redrow, Inland, Bovis, SMP all still great shares for the next few years min.

Crest is one of my faves, an excellent all rounder: strong landbank, good growing yield. south east/london focus and very strong forecasted EPS growth. IC also tips at as the pick of the sector. Bovis reiterated today too with similar 37% upside to £15.05.. fallen out of love with the market at the moment which is making it particularly good value. 2227 will take a good look at BDEV's full year results later and compare. Sold my Bdev a while back as prefer Redrow, Crest, Bovis, Inland and SMP.

Has fallen out of favour with the market at the moment, but this should change at full year results in Feb. Goldman Sachs just issued £15.05 price target: http://www.directorstalkinterviews.com/bovis-homes-group-plc-36-7-potential-upside-indicated-by-goldman-sachs/412677659

http://www.proactiveinvestors.co.uk/columns/broker-spotlight/22921/crest-nicholson-is-goldman-s-top-pick-in-midst-of-housing-sector-s-results-season

Crest upgraded to conviction buy and top pick in the sector by Goldmine Sacks! Price target a whopping £7.90 !

Not true 2227, pleanty of builders with superior EPS growth than RDW. Just look at at TW. for instance: 67% EPS growth for its last full financial year. Bovis homes 75%. Bellway 76%.. there are pleanty. Also Inland Homes is about to post 145% EPS growth. TW., PSN and BDEV all have significant capital return policies and you also need to look at their forward pe ratios which are much lower, comparing current pe ratio is a pitfall. You need to compare a variety of issues such as landbank, price to book, cyclically adjusted price earnings and dividend policy. Redrow is a great company and I continue to hold but some of your predictions are not analysis but guesswork.

Nearly all builders have managed to beat analysts forecasts this year for full year results due to extremely strong trading conditions- most builders however release full year results in the spring with Redrow and Bdev having different year ends. Analysts will indeed upgrade the EPS now that results are out, and you can bet anything you like that Redrow will deliver far superior EPS than Telford Homes with ease over the next 3-5 years hence why it is now valued at a quid higher compared to £4.50 for both just months ago. 60p EPS for next year is too optimistic though 2227, that implies c. 35% increase in revenue (as targetted operating margin improvement by 2018 only c.2% higher) which given Steve Morgan is seeking to increase revenue from 1.1bn to 1.6bn (39% increase) by 2018 looks far too optimitic for enxt year. I think EPS will be more like 53p next year.

Excellent results, slightly above analyst forecasts. Strong increase in NAV and EPS- highlighting just why Redrow is superior value to the likes of TEF for instance which we have now opened a gap of £1 against in months. Expect this to continue to widen too. Still think your 6 months time frame for 700p is a bit too optimistic 2227 as that would place Redrow as the most expensively valued builder in the sector, even above persimmon with its superior capital return policy. Maybe this time next year though we could be approaching that level. Would be nice to close above a fiver.

As much as I like redrow and remain very much a long term holder for the next few years at least, 700p within the next six months is pie in the sky in terms of realism! This would imply a price to book multiple of 3.7 which is completely unrealistic considering the most expensively valued builder in the sector, persimmon, trades at "just" 2.9 times which looks toppy in itself. Redrow will do very well, but not that well in the next six months- no chance! Next couple of years very much a possibility though.

Also remember the FTSE 100 is very heavily weighted towards mining and oil stocks as well as banks, so doesn't really reflect the sector we are in either. If you have done your research and and confident about the company then just sit back and relax and don't worry about day to day fluctuations too much.. have another look around results and hopefully you might be pleasantly surprised.

You are comparing the FTSE 100 index to a small cap that isn't even in this index and is infact listed on the AIM market. Your comments suggest that Inland Homes is not the share for you, this is a relatively illiquid share and moves when you least expect it. Most holders here don't concern themselves with day to day price fluctations and take a longer terms viw.

Thanks CM. I don't have a particular time frame on the £1 target but the current sum of the parts valuation is in that region so eventually we should get there if not more if not taken over beforehand! The DOW has turned tonight and ended up down so it could be another volatile day for UK markets tomorrow. Currently FTSE futures are 2% down.. interesting times!

Is a funny share, tends to move when you least expect it to. If you know and understand this business properly though you wouldn't care, its just a matter of time before this breaks £1. I had no concerns when I topped up yesterday at 65pence, and I was more than happy to hold during the storm. A thorough understanding of the businesses you invest in can given you the confidence to hold during such times and even to purchase during the mass sell offs. I have to admit I did enjoy yesterdays cross fire sale, don't remember anything that volatile since 08/09. I remember when I too started investing back in 2008, I would panick sell as sentiment turned and also tended to take profits too early. Don't kick yourself Ben, simply a learning experience that will better equip you going forward. Only invest in business you fully understand and are confident to hold even during a downturn.

Dow plumetting back down now.. you may not have jumped the gun too soon.

Could not believe my luck today, a severe sector wide retrace presented me with a buying opportunity at 65 pence! I am now fully invested with no cash positions, I cannot see this decline across the board lasting! The pe ratio for the year already ended and to be announced at the end of next month is now below 10 at around 9.7 at today's close, astonishing value! Who knows if there will be further declines in the indices in the future, but for a medium to long term investment you simply cannot go wrong at these levels. Good luck all.. US indexes recovering slightly as I type, if they can hold up we should see a bounce tomorrow.

Holding up very well here indeed considering the wider market retrace and downward pressure on the sector today! In a selfish wasy, I am kind of hoping for a dip back down to 70p before results as I have a bit of spare cash at the moment but I don't hold too much hope. I think we will be nearer 80p come late September though, we are trading on a forward pe ratio of around 10x at the moment and should produce EPS growth of c. 140% for the year announced in Sept! Stunning value and growth potential here, one of my favourites.

Reiterating my very own thoughts, a must read: "I think it is horses for courses. Bovis is investing more in land and so has a stronger growth profile than peers. Also the first half results may look weaker but may also reflect the mix in the period i.e. more social housing as a percentage of sales than we are set to see in the full year. The overall point being that investors have quickly compared Bovis' financial results to the rest of the sector using headline figures. Yes Bovis isn't going for special dividends but that also means that dividends should be sustainable. I think the investment Bovis is making in land and growing its housing output has suppressed the returns on capital and margins. So on face value Bovis looks weaker than peers but it is investing more in growth which will make it look stronger a few years out. Looking at growth and taking yesterday's closing price the forecast P/E for 2018 is 7X with a yield of 7.5% that is forecast to be 1.9X covered. So the growth strategy starts to deliver a market leading yield a few years out. This is also a yield not dependent on special dividends but one that is well covered by profits."

"Bovis Homes Group plc (LON:BVS)‘s stock had its “overweight” rating reissued by equities research analysts at JPMorgan Chase & Co. in a note issued to investors on Monday, AnalystRatingsNetwork.com reports. They presently have a GBX 1,300 ($20.34) price objective on the stock for the year. JPMorgan Chase & Co.’s price target indicates a potential upside of 15.15% from the company’s previous close."