Investors think that they can see the writing on the wall for housebuilders. Bellway’s warning yesterday that it may need to set aside a greater chunk of cash to tackle unsafe cladding made those suspicions look much more like a reality.
Pessimism towards prospects for the mid-cap construction group’s earnings is at about the same level that it was two weeks after the country was first plunged into lockdown. A forward price/earnings ratio of only 6.5 is the lowest since April 2020 and below a post-Brexit referendum multiple of just over eight. So far this year, the shares have fallen by more than a quarter.
There is pain ahead, clearly, although it is factored into the housebuilder’s dismal market rating. Aside from Berkeley, its London-focused
