Barratt Redrow’s net private reservation rates rose 6% to 0.67 in the 13 weeks to 29 March.
The order book grew by 13% to £3.5bn, reflecting a total of 11,395 homes. Build cost inflation is expected to be around 2% this year.
Helped by lower land investment, year-end net cash is now expected to land between £550-650mn (previously: £400-500mn).
Full-year completions guidance has been reiterated at between 17,200-17,800 new homes. Underlying pre-tax profits are expected to land in line with market forecasts, pointing to growth of around 16% to £568mn.
Barratt has completed £84mn of the current £100mn buyback programme, with the remainder to be finished by the end of June 2026.
The shares rose 2.4% in early trading.
Our view
Barratt Redrow’s third-quarter numbers were broadly positive, with reservation rates marching higher and the vast majority of this year’s sales already locked in. The shares have already been hit hard this year, so news that this year’s financial performance is on track buoyed markets on the day.
Revenue growth in the first half was fuelled by an uplift in both new home completions and average selling prices. But profit expectations have come down steadily over the year, partly due to higher levels of incentives to stimulate buyer demand. Market expectations for full-year underlying pre-tax profits are now around £568mn, a level we’re comfortable with, and which still points to 16% growth year-on-year.
The picture for next year is more uncertain. The conflict in Iran could lead to a prolonged period of higher interest rates and increased costs, which would further weigh on near-term profit expectations.
Barratt’s acquisition of Redrow has increased both its geographical reach and the different types of customers it appeals to. The Redrow brand focuses on larger, higher-quality homes for more affluent buyers. The higher average selling prices of these homes should be a major positive for margins moving forward.
The order book is in good shape and growing, and there’s a strong landbank ready to be unleashed when the housing market recovers. But with interest rates now potentially staying higher for longer, it could be some time before the housing market springs back to life.
On the balance sheet side, structuring the Redrow acquisition as a share offer means there’s still a sizable net cash position. And with rising macroeconomic uncertainty, Barratt’s moved quickly to cut back on land spending and preserve its cash balances – a move we approve of.
Shareholder returns remain a key focus, and the sharp decline in valuation in 2026 means the forward dividend yield of 6.4% is more significant than it’s been for some time. As always though, no shareholder returns are guaranteed.
All things considered, Barratt is in good shape with a strong balance sheet and formidable scale. The valuation has come down sharply in the wake of the Iran conflict, and the sell-off looks overdone on a long-term view. But it could be a while before macroeconomic conditions turn more favourable, so potential investors will need plenty of patience. The change of CEO at the end of the year also adds transition risk.
Environmental, social and governance (ESG) risk
Most housebuilders are relatively low risk in terms of ESG, particularly for those in Europe. However, there are some environmental risks to consider, from direct emissions to the impact of their buildings on the local ecology. The quality and safety of their buildings is also a key risk.
According to Sustainalytics, Barratt Redrow’s management of ESG risk is strong.
Commitments are in place to deliver net zero houses by 2030 through a combination of energy-efficient equipment, the use of renewables and the establishment of alternative heating technologies. While Barratt reports that all its revenues come from sustainable products, the total portion of recycled materials used in its operations is undisclosed.
Barratt Redrow key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.