Berkeley Group (BKGFY) AI Stock Analysis

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Berkeley Group

(OTC:BKGFY)

Rating:75Outperform

Price Target:―

Berkeley Group's strong financial performance, characterized by robust profitability and a solid balance sheet, is a key strength. Despite recent declines in revenue and cash flow, the company's conservative leverage and equity position offer resilience. Positive technical indicators support upward momentum, though caution is warranted due to overbought signals. The appealing valuation suggests potential upside, making the stock relatively attractive in the residential construction industry.

Berkeley Group (BKGFY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.07B

Dividend Yield1.62%

Average Volume (3M)96.56K

Price to Earnings (P/E)10.8

Beta (1Y)0.63

Revenue Growth3.93%

EPS Growth-55.92%

CountryUS

Employees2,610

SectorConsumer Cyclical

Sector Strength57

IndustryResidential Construction

Share Statistics

EPS (TTM)0.48

Shares Outstanding495,331,760

10 Day Avg. Volume94,988

30 Day Avg. Volume96,555

Financial Highlights & Ratios

PEG Ratio1.01

Price to Book (P/B)0.30

Price to Sales (P/S)0.00

P/FCF Ratio2.49

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Berkeley Group Business Overview & Revenue Model

Company DescriptionBerkeley Group Holdings plc (BKGFY) is a leading British property development company, primarily focused on residential development. It operates within the real estate sector, specializing in the planning, development, and sale of residential properties, including apartments, houses, and mixed-use developments. The company is renowned for its focus on high-quality urban regeneration projects, mainly in London and the South East of England.

How the Company Makes MoneyBerkeley Group makes money primarily through the development and sale of residential properties. The company's revenue model is based on acquiring land, securing planning permissions, constructing homes, and ultimately selling these properties to homebuyers or real estate investors. Key revenue streams include income from the sale of completed residential units and, to a lesser extent, rental income from properties held for investment purposes. Partnerships with local governments and other developers are significant, as they often collaborate on large-scale urban regeneration projects that can be more complex and financially rewarding. Additionally, economic factors such as housing demand, interest rates, and government housing policies significantly impact Berkeley Group's earnings.

Berkeley Group Earnings Call Summary

Earnings Call Date:Jun 20, 2025

(Q2-2024)

% Change Since: -9.24%|

Next Earnings Date:Dec 05, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed performance, with Berkeley Group maintaining strong financial metrics and stable sales prices amidst challenging market conditions, including reduced private sales and regulatory hurdles. The extension of profit guidance indicates confidence in future performance, yet regulatory and planning challenges pose significant hurdles.

Q2-2024 Updates

Positive Updates

Profit Before Tax Exceeds Guidance

Berkeley Group reported a profit before tax of GBP 298 million, slightly ahead of guidance, with an operating margin of 19.5%.

Strong Financial Position

Net cash has been maintained above GBP 400 million, with shareholders' funds increasing by GBP 82 million to GBP 3.4 billion.

Stable Sales Prices and Margins

Despite a 1/3 reduction in private sales, sales prices remained stable, and build cost inflation is negligible.

Extended Profit Guidance

The guidance has been extended to deliver at least GBP 1.5 billion of pretax profit over the three years ending April 2026.

Land Holdings and Forward Sales

Berkeley has cash due on forward sales covering the next three years of GBP 2 billion, providing strong visibility on near-term earnings.

Negative Updates

Private Sales Drop

Private sales are down by 1/3 compared to last year due to elevated interest rates.

Regulatory and Planning Challenges

The uncertainty in the current planning and regulatory system is resulting in delays and increased costs, impacting the pace of home delivery.

Earnings Per Share Decrease

Earnings per share decreased by 1% to 198.3p, mainly due to the impact of a higher corporation tax rate.

Decreased Revenue

Revenue decreased by 1% to GBP 1.2 billion, with lower volumes partially offset by higher average selling prices.

Company Guidance

In the earnings call for the six months ending October 31, 2023, Berkeley Group executives provided detailed guidance and performance metrics. The company reported a pretax profit of GBP 298 million, exceeding previous guidance, with an operating margin of 19.5% and net cash maintained above GBP 400 million. The firm aims to deliver at least GBP 1.5 billion of pretax profit over the three years ending April 30, 2026. Despite a 1% drop in earnings per share to 198.3p, they managed to keep the pretax return on equity at 17.7%. The sales market faced challenges, with private sales down by a third, but sales prices remained stable, and build cost inflation was negligible. Berkeley's forward sales cover the next three years, totaling GBP 2 billion, providing strong visibility on earnings and cash flow. Shareholders' funds increased to GBP 3.4 billion, and the net asset value per share rose by 3.8% to GBP 32.19. The company plans to maintain its robust balance sheet and capital allocation strategy, with ongoing annual shareholder returns of GBP 283 million until September 2025. If new investments are not made by April 2027, Berkeley intends to return 100% of the net profit earned from FY24 to FY27 to shareholders.

Berkeley Group Financial Statement Overview

Summary

Berkeley Group demonstrates solid financial health with strong profitability margins and a sturdy balance sheet. While revenue and free cash flow have seen some declines, the company's prudent debt management and consistent equity position provide a buffer against potential risks. Continued focus on revenue growth and cash flow efficiency will be crucial to sustaining long-term success.

Income Statement

Very Positive

The company has shown a consistent gross profit margin above 25% over the years, indicating stable profitability. The net profit margin for the latest year is approximately 16.1%, which is healthy for the industry. However, there has been a slight decline in revenue over the past year, which needs monitoring. EBIT and EBITDA margins have also remained strong, reflecting efficient operations.

Balance Sheet

Positive

The company maintains a strong equity position with an equity ratio of roughly 50.9% for the latest year, which is a positive indicator of financial stability. The debt-to-equity ratio is low at approximately 0.19, suggesting a conservative approach to leveraging. The return on equity has been robust, although it slightly decreased from previous years, suggesting a need to enhance profitability.

Cash Flow

Positive

The company has a strong free cash flow, though it has decreased from the previous year, indicating some challenges in cash generation. The operating cash flow to net income ratio is lower than desired, suggesting potential efficiency improvements in cash conversion. Despite this, the company maintains a solid cash position, supporting liquidity.

Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
2.46B	2.55B	2.35B	2.20B	1.92B
	Gross Profit
644.50M	696.80M	664.80M	635.30M	637.40M
	EBIT
479.70M	522.00M	508.00M	502.30M	469.90M
	EBITDA
482.00M	527.60M	513.60M	508.20M	474.60M
	Net Income Common Stockholders
397.60M	465.70M	482.40M	422.70M	410.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.19B	1.07B	928.90M	1.43B	1.64B
	Total Assets
7.00B	6.86B	6.59B	5.55B	5.65B
	Total Debt
664.40M	665.10M	665.90M	303.20M	502.50M
	Net Debt
-527.60M	-405.30M	-263.00M	-1.13B	-1.14B
	Total Liabilities
3.44B	3.53B	3.45B	2.38B	2.55B
	Stockholders Equity
3.56B	3.33B	3.14B	3.18B	3.10B
Cash Flow		Free Cash Flow
232.00M	408.50M	-130.80M	329.30M	476.90M
	Operating Cash Flow
233.40M	410.50M	-129.50M	331.70M	486.60M
	Investing Cash Flow
60.90M	-12.80M	-27.70M	-6.60M	-40.60M
	Financing Cash Flow
-172.70M	-256.20M	-342.10M	-535.80M	-82.10M

Berkeley Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price10.31

Price Trends

50DMA

11.21

Negative

100DMA

10.31

Negative

200DMA

10.78

Negative

Market Momentum

MACD

0.02

Positive

RSI

30.32

Neutral

STOCH

22.83

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BKGFY, the sentiment is Negative. The current price of 10.31 is below the 20-day moving average (MA) of 11.45, below the 50-day MA of 11.21, and below the 200-day MA of 10.78, indicating a bearish trend. The MACD of 0.02 indicates Positive momentum. The RSI at 30.32 is Neutral, neither overbought nor oversold. The STOCH value of 22.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BKGFY.

Berkeley Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TOL	81 Outperform	$10.63B	8.03	18.09%	0.92%	1.59%	-8.04%
MHO	77 Outperform	$2.80B	5.62	19.02%	―	8.68%	8.39%
TMHC	77 Outperform	$5.76B	6.83	15.97%	―	12.19%	23.15%
BKGFY	75 Outperform	$5.07B	10.82	10.62%	1.62%	3.93%	-55.92%
MTH	71 Outperform	$4.59B	6.47	14.58%	2.69%	-0.68%	-7.99%
SKY	63 Neutral	$3.47B	17.67	13.38%	―	22.52%	-18.73%
Sector *	62 Neutral	$6.76B	11.06	2.80%	6.66%	2.68%	-24.89%

* Consumer Cyclical Sector Average

Performance Comparison

BKGFY

Berkeley Group

10.31

-1.33

-11.43%

MHO

M/I Homes

106.36

-16.76

-13.61%

MTH

Meritage

63.91

-17.33

-21.33%

SKY

Champion Homes

60.38

-11.39

-15.87%

TOL

Toll Brothers

108.31

-9.15

-7.79%

TMHC

Taylor Morrison

58.73

2.06

3.64%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.