BOOT, RDW, TW.: Homebuilders under investors’ lens amid signs of a slowdown

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BOOT, RDW, TW.: Homebuilders under investors’ lens amid signs of a slowdown

 BOOT, RDW, TW.: Homebuilders under investors’ lens amid signs of a slowdown
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Highlights

  • Activity in the UK’s construction sector has plunged from 56.4 in May to 52.6 in June, as per S&P Global PMI.
  • All-Sector PMI, which incorporates manufacturing and services along with construction, went up slightly from 53.4 in May to 53.6 in June.
  • The UK housing market is thus expected to slow down over the coming months, as per Mortgage lender Nationwide.

Amid the UK’s worsening economic outlook, construction activity has sharply slowed down in the country last month. According to the S&P Global Purchasing Managers' Index (PMI), activity in the UK’s construction sector has plunged from 56.4 in May to 52.6 in June. This marks the lowest expansion in construction activity since September 2021.

The housing component dropped below the 50-level for the first time since May 2020, and this level distinguishes expansion from contraction. The recent fall in construction activity owed to a fall in the housing component. With businesses holding themselves back from spending more, there was a significant fall in the momentum of commercial work.

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According to a Reuters report, the economics director of S&P Global, Tim Moore, said that construction growth in June was impacted by a combination of factors including the UK’s falling business outlook and deteriorating consumer demand amid the growing cost of living crisis.

However, in contrast with the construction downturn, the overall economy seemed more stable. An all-sector PMI, which incorporates manufacturing and services along with construction, went up slightly from 53.4 in May to 53.6 in June.

The Bank of England is expecting the inflation levels to go up from the existing 40-year high of 9.1% to surpass 11% in October, which will further push up the interest rates. The UK housing market is thus expected to slow down over the coming months, as per Mortgage lender Nationwide.

Amid the signs of a slowdown, let’s take a look at 3 UK housebuilder stocks that investors can keep an eye on.

Henry Boot Plc (LON: BOOT)

Henry Boot plc is a UK-based company engaged in the construction and development of properties. The market cap of Henry Boot stands at £384.39 million as of 6 July. The firm has given one-year return of 8.24% to its investors as on Wednesday, with its YTD return standing at 1.76%. Its EPS stands at 0.09 and it is currently offering an annual dividend yield of 2.1% to investors. Henry Boot plc’s shares were trading at GBX 290.00, up by 0.69%, at 12:25 AM (GMT+1) on 6 July.

Redrow plc (LON: RDW)

Redrow plc is among the largest builders of premium new homes across the UK. The market cap of the FTSE 250 constituent stands at £1,656.70 million as of 6 July. The company's performance has not been well over the past year with its YTD and one-year returns in the negative territory as of 6 July, at -31.52% and -25.49, respectively. Its EPS stands at 0.74 and it is currently offering an annual dividend yield of 6.1% to investors. Redrow plc’s shares were trading at GBX 480.00, up by 2.04%, at 12:29 AM (GMT+1) on 6 July.

Taylor Wimpey plc (LON: TW.)

Taylor Wimpey plc is also one of the biggest home construction businesses across the UK. The FTSE 100 company's market cap stood at £4,019.40 million as of 6 July. The company's performance has gone down over the past year with its YTD and one-year returns in the negative territory as of 6 July, at -34.15% and -29.98, respectively. Its EPS stands at 0.06 and it is currently offering an annual dividend yield of 7.5% to investors. Taylor Wimpey plc’s shares were trading at GBX 115.40, up by 1.41%, at 12:33 AM (GMT+1) on 6 July.

 

 

 

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