Barratt Developments.
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The FTSE 100 has taken a real hammering due to the global epidemic & economic implications.
Barratt Developments plc is one of the largest residential property development companies in the U.K. It operates via network of over 30 divisions and was founded back in 1958 as Greensitt Bros, before control was taken by Sir Lawrie Barratt.
Barratt’s share price plummeted by over 50% from it’s February high, due to this latest stock market crash. However, this stock was one of the first to rally by over 35% in just a few days/
This suggests that Barratt developments could be one of the first stocks to spearhead the FTSE 100 recovery.
Could this be a great opportunity to get yourself on the FTSE 100 property ladder?
In this video, we are going to find out. I’m going to deep dive into the stock and inform whether I have PERSONALLY purchased shares in Barratt Developments.
LETS DIVE IN (From Alliance pharm (Hip Hop)
Dividend Cancelled?
Property development companies are going through a tough time right now with Redrow, Berkeley group & Crest Nicholson all cancelling or scaling back dividends!
Barratt developments also cancelled it’s dividend to save itself £100 million in cash flow.
The business also suspended all financial guidance and shutdown all construction sites, sales centres & offices.
Barratts has also paused all land purchases, recruitment & non essential capital expenditure.
However, it is continuing to pay suppliers & sub contractors.
Previous Financial Crisis?
FTSE 100 property developers are in a much stronger position than during the 2008 stock market crash.
According to Barratts investor statement:
“We are in a position of strength, with a robust balance sheet, a highly skilled workforce and an experienced board”
Will the property market recover?
The real question is could we be facing a double dip stock market crash or are we set for a healthy & rapid V shaped recovery.
As consumers will be shaken by this incident & may not wish to purchase a new property for at least a few years.
Despite the rock bottom interest rates on mortgage borrowing.
However, as the U.K housing market is very resilient & at it’s core there is an EXCESS IN DEMAND of Supply, then the rules of economics should favour Barrett developments in the long term.
(DEEP DIVING INTO THE STOCK)
- Trading at 63.1% below its fair value
- Earnings are forecast to grow 3.81% per year
- Earnings grew by 3.1% over the past year
- Strong balance sheet.
FINAL THOUGHTS?
Overall, Barratt developments is an a healthy position to whether this storm. It’s balance sheet show’s it has plenty of cash on hand to pay all of it’s debts easily.
The companies management has also exercised capital discipline in cutting any unnecessary expenses.
As the economy recovers, the rules of supply & demand will reign true.
People will always need housing in the U.K & as the property market recovers.
Barratt developments should reinstate its healthy 7% dividend.
I predict this company to be one of the first to spearhead the FTSE 100 recovery!
So I did purchase shares in Barratt developments.
(FINANCIAL Advice CLIP from other video)
I would love to know your thoughts on house building stocks in the U.K. Do you predict a quick recovery? Or Do you think they may take many years?
Comment your thoughts on our youtube channel!
