Housebuilder Bellway PLC (LSE:BWY) shares fell than rose slightly after its first-half results showed sharp declines in completions, revenues, profits and dividend, with another £16.8 million set aside to cover cladding remediation costs.
The good news, said analysts, is that none of the news was really a surprise.
Chief executive Jason Honeyman called it a "another resilient performance in a period of challenging trading conditions", adding that a reduction in mortgage interest rates during the period has helped the market and the board was encouraged by an improvement in reservations since the start of the new calendar year.
For the full year to 31 July he said the group remained "on track" to deliver previous guidance for around 7,500 homes, down from 10,945 last year, at an average selling price of £295,000.
"If market conditions remain stable, we are well-placed to build the order book through the second half which will serve as a platform for a return to growth in financial year 2025," he said.
Analysts at UBS said the consensus forecasts for profits before tax and exceptional items of around £205 million will remain broadly unchanged, which implies a split of around 65:35 between the first and second halves.
Jefferies analysts said: "As we near the end of the spring selling season and ahead of a General Election expected in 2H24, we anticipate a slowing summer."
However, Bellway is their top pick in the sector thanks to a strong land bank that provides what Jefferies believes is "some of the best potential to leverage into any recovery in the housing market".
AJ Bell investment director Russ Mould said the lack of movement in the share price is "possibly because the headline, near-term valuation metrics of price/earnings and dividend yield do not look especially attractive" and perhaps also because the outlook for the economy and interest rates in the UK "remains murky".
The valuation "could be deceptive", he said, as earnings are depressed and the dividend is being cut this year, while Bellway is one of two in the sector whose shares trade at a small discount to net asset value per share of £28.88p and 28% below the 1.14 times book-value-per-share multiple implied by the recent all-stock offer from Barratt for smaller rival Redrow.
"The question then is what may prompt investors to reassess Bellway and drive the stock back above one times book value," Mould said.
"Ultimately, higher completions, revenues and profits is the simple answer, and the good news is that the FTSE 250 firm may be nearing the bottom of this profits cycle."