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Barratt Developments (BTDPY)
OTHER OTC:BTDPY
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Barratt Developments
(OTC:BTDPY)
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Rating:60Neutral
Price Target:
$11.00
▲(7.00% Upside)
Action:ReiteratedDate:02/11/26
The score is driven primarily by solid balance-sheet strength and revenue growth, offset by weak cash-flow trends and margin pressure. Technical signals are neutral and valuation is mixed (good yield but high P/E). Earnings-call guidance and capital returns help, but profitability and cash headwinds temper the outlook.
Positive Factors
Strong balance sheet / low leverage
A very low debt-to-equity ratio (0.03) and strong equity backing provide durable financial flexibility, lowering refinancing risk and supporting continued land acquisition, development funding and capital return programs even if housing-market cash flows soften.
Large owned landbank & pipeline
A 5.6-year owned/controlled land duration and 27,500 strategic plots give structural visibility of future completions and outlet expansion. This pipeline reduces dependence on immediate land purchases and supports medium-term volume and margin recovery through controlled supply.
Confirmed merger synergies & outlet expansion
Delivery of cost synergies (c.£30m+ delivered) and a revenue-synergy plan to add outlets provide structural margin improvement and sales capacity. Realised synergies bolster recurring cost efficiency and create a platform for sustainable outlet-led volume growth.
Negative Factors
Weak cash generation
A severe drop in free cash flow and very low operating-cash-to-net-income ratio indicate weak cash conversion from earnings. Over months this constrains funding for build-safety spend, land payments and buybacks unless operating cash improves or working-capital patterns normalize.
Margin compression and low net margin
A 200bp gross margin decline and low net margin reflect structural pressure from build-cost inflation, incentives and flat pricing. Sustained margin compression limits retained earnings and capital generation, making long-term profitability and return-on-capital recovery more challenging.
Large legacy building-safety provisions & cash needs
Over £1bn of legacy provisions and c.£250m remediation cash guidance create multi-year cash outflows and execution risk. Ongoing remediation spending can crowd out investment, press cash balances and add timing uncertainty tied to regulatory approvals and remediation schedules.
Barratt Developments (BTDPY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.08B
Dividend Yield4%
Average Volume (3M)38.42K
Price to Earnings (P/E)25.6
Beta (1Y)0.62
Revenue Growth37.52%
EPS Growth18.46%
CountryUS
Employees6,270
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)0.19
Shares Outstanding710,808,300
10 Day Avg. Volume19,551
30 Day Avg. Volume38,418
Financial Highlights & Ratios
PEG Ratio2.08
Price to Book (P/B)0.82
Price to Sales (P/S)1.16
P/FCF Ratio577.39
Enterprise Value/Market Cap0.89
Enterprise Value/Revenue1.07
Enterprise Value/Gross Profit7.66
Enterprise Value/Ebitda13.24
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Barratt Developments Business Overview & Revenue Model
Company DescriptionBarratt Redrow Plc engages in the development of residential and non-residential properties mainly in the United Kingdom. It offers services in land, design, construction, and sales and marketing. The company was founded by Lawrence Arthur Barratt in 1958 and is headquartered in Coalville, the United Kingdom.
How the Company Makes MoneyBarratt Developments generates revenue primarily through the sale of residential properties, which includes both private and affordable homes. The company's revenue model is driven by the successful acquisition of land, which is then developed into residential projects. Key revenue streams include the sales of finished homes, which are often sold on a forward basis, allowing the company to secure funding and manage cash flow effectively. Additionally, Barratt benefits from partnerships with local authorities and housing associations, which can provide support and funding for affordable housing projects. The company also leverages economies of scale in construction and procurement, which helps in optimizing costs and enhancing profit margins.
Barratt Developments Earnings Call Summary
Earnings Call Date:Feb 11, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Sep 09, 2026
Earnings Call Sentiment Neutral
The call emphasised resilience: management delivered volume growth, confirmed almost all of the GBP 100m synergy target, showed strong brand and quality credentials, and retained a robust land bank and capital-return plan. Offsetting this were meaningful margin pressures (200bps gross margin decline, 90bps operating margin fall), a 13.6% drop in adjusted PBT and a H1 net cash outflow as working capital seasonal patterns and Part Exchange investment weighed on cash. Guidance remains intact (completions range and net cash target) and management sees clear levers to improve gross margin, but near-term headwinds from incentives, build-cost inflation and subdued consumer confidence temper the outlook.Q2-2026 Updates
Positive Updates
Successful Redrow integration and confirmed synergies
Integration of Redrow near completion; virtually all of the GBP 100m annual cost synergy target confirmed, with >GBP 30m delivered in H1 and GBP 20m delivered in FY25; revenue (sales outlet) revenue-synergy program underway (31 planning applications submitted, 16 approvals).
Completions and volume delivery
Delivered 7,444 homes in H1, a 4.7% increase on the aggregated prior period; underlying private completions +1.8%; PRS completions up >50% to 423 homes; affordable completions +26%, representing 19.5% of wholly owned completions.
Revenue growth and average selling price improvement
Revenue grew 10.5% to GBP 2.6bn driven by higher completions and mix; wholly owned average selling price up 4.9%, with strongest ASP growth in Central and East regions.
Strong land bank and development pipeline
Owned and controlled land duration of 5.6 years at December; more than 27,500 strategic plots submitted to local planning authorities across 103 applications, supporting outlet growth without significant new land purchases.
Quality, customer service and brand credentials
All three brands rated 'excellent' on Trustpilot; 5-star HBF customer service rating for 16th consecutive year; 115 NHBC Pride in the Job awards and 45 Seals of Excellence—supporting brand strength and customer proposition.
Improved operating discipline and cost control
Adjusted administrative expenses reduced 5.4% to GBP 184.8m vs aggregated prior period; cost synergies delivered GBP 23.2m positive impact in the half and expected P&L benefit of a further GBP 50m in FY26.
Capital returns and balance sheet resilience
Interim dividend proposed 5p per share (2x cover for full year maintained); GBP 50m share buyback completed in H1 (GBP 100m program); net cash guidance of GBP 400–500m at year end after expected H2 inflow (~GBP 300m).
Part Exchange uptake and PRS recovery
Part Exchange usage in private reservations increased to 23% from 14%, introduced into Redrow and managed carefully (only 180 PX units unsold at period end); PRS completions increased >50% to 423 homes, with PRS strategy retained at selective pricing.
Negative Updates
Adjusted profit decline
Adjusted profit before tax (pre-PPA) down 13.6% to GBP 200m in H1, reflecting higher net interest costs and lower joint venture profits.
Gross margin compression
Adjusted gross margin fell 200 basis points to 15%, driven by flat underlying pricing, increased use of noncash sales incentives (extras/upgrades) and build cost inflation.
Operating margin deterioration
Adjusted operating margin (pre-PPA) reduced by 90 basis points to 8% in the half, reflecting the combined margin headwinds despite cost synergy benefits.
Embedded land bank margin decline
Embedded gross margin on owned land ended the half 30 basis points lower at 18.9% (post-PPA), driven by flat pricing / build inflation flow-through and plot mix, partially offset by new land bought at c.23% gross margin.
Higher incentives and build cost inflation
Targeted increased use of noncash incentives (c.1% uplift applied in H1) negatively impacted gross margin; reported underlying build cost inflation ~1% in H1 with FY26 guidance ~2% (1.5% labour, 0.5% materials).
Weaker forward sales and outlet levels
Private forward order book 10% lower at the half-year point (partly timing/starting base effect); PRS and other multi-unit reservations paused pre-budget (private reservation mix from PRS fell to 4% from 9%); average sales outlets c.405, below prior year.
Short-term cash outflow and land creditor gap
Net cash outflow in H1 close to GBP 600m (driven by seasonal construction WIP and Part Exchange investment ~GBP 313m and dividends/buybacks); land creditors funded 15% of land investment (below target 20–25%).
Legacy building safety provisions and timing risk
Total legacy property provisions remain just over GBP 1bn with GBP 77.8m spent in H1; cash spend guidance c. GBP 250m for FY26 and material remediation activity expected to continue over several years (possible acceleration in FY27–28 due to regulatory approvals timing).
Company Guidance
Guidance for FY‑26: total completions are expected to be 17,200–17,800 homes, underlying pricing broadly flat, build‑cost inflation c.2% (including procurement synergies), an adjusted finance charge of c.£30m and provision‑related imputed finance c.£32m, and c.£250m of building‑safety spend; year‑end net cash is expected to be c.£400–£500m (with an anticipated c.£300m cash inflow in H2). Capital return and buybacks: a 5p interim dividend (2x full‑year cover) and a £100m buyback programme (£50m completed H1, £50m to complete H2). Synergies and outlets: the £100m annual cost‑synergy target is confirmed (£20m delivered in FY25, a further £50m targeted in FY26 with >£30m delivered in H1) and revenue synergies target 45 incremental sales outlets (31 planning applications submitted, 16 approvals); average outlets are guided to be flat in FY26 and to rise to 425–435 in FY27 with ~15 synergy outlets coming on stream. Other metrics referenced: owned/controlled landbank 5.6 years, >27,500 strategic plots across 103 applications, expected JV completions ~600 units, and H1 completions were 7,444 (wholly‑owned ASP +4.9%).Barratt Developments Financial Statement Overview
Summary
Strong revenue growth and a very low debt-to-equity ratio support stability, but profitability is constrained by low net margins and the cash-flow profile is weak (sharp free cash flow decline and low operating cash flow vs. net income).Income Statement
Barratt Developments shows a strong revenue growth rate of 33.83% in the latest year, indicating robust sales performance. However, the gross profit margin has decreased from previous years, currently at 14.07%, which may suggest rising costs or pricing pressures. The net profit margin is relatively low at 3.34%, reflecting challenges in converting revenue into profit. The EBIT and EBITDA margins are moderate, indicating operational efficiency but with room for improvement.65
Positive
Balance Sheet
The company maintains a healthy debt-to-equity ratio of 0.03, showcasing strong financial leverage management. The return on equity (ROE) is modest at 2.37%, suggesting moderate efficiency in generating returns from equity. The equity ratio is strong, indicating a solid capital structure with significant equity backing the assets.75
Positive
Cash Flow
Cash flow analysis reveals a significant decline in free cash flow growth, down by 90.06%, which could indicate cash management challenges. The operating cash flow to net income ratio is low at 0.012, suggesting limited cash generation relative to net income. The free cash flow to net income ratio is healthier at 0.38, but overall cash flow performance needs improvement.50
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 5.91B | 5.58B | 4.17B | 5.32B | 5.27B | 4.81B |
| Gross Profit | 825.05M | 784.80M | 689.00M | 1.13B | 1.30B | 1.12B |
| EBITDA | 477.22M | 398.10M | 255.70M | 767.00M | 1.06B | 858.90M |
| Net Income | 213.07M | 186.40M | 114.10M | 530.30M | 515.10M | 659.80M |
Balance Sheet | ||||||
| Total Assets | 11.26B | 11.55B | 7.88B | 8.01B | 8.22B | 7.49B |
| Cash, Cash Equivalents and Short-Term Investments | 373.90M | 969.60M | 1.07B | 1.27B | 1.35B | 1.52B |
| Total Debt | 251.30M | 255.20M | 242.80M | 249.60M | 254.40M | 246.00M |
| Total Liabilities | 3.50B | 3.68B | 2.44B | 2.42B | 2.59B | 2.04B |
| Stockholders Equity | 7.76B | 7.87B | 5.44B | 5.60B | 5.63B | 5.45B |
Cash Flow | ||||||
| Free Cash Flow | 116.59M | 11.20M | 89.00M | 498.70M | 406.40M | 1.10B |
| Operating Cash Flow | 132.05M | 29.30M | 96.20M | 521.80M | 436.30M | 1.11B |
| Investing Cash Flow | -41.80M | 195.80M | 12.00M | 55.40M | -241.10M | -9.70M |
| Financing Cash Flow | -370.37M | -320.80M | -308.60M | -590.60M | -378.40M | -197.00M |
Barratt Developments Technical Analysis
Negative
10.28
Price Trends
10.27
Negative
10.21
Negative
10.51
Negative
Market Momentum
-0.02
Positive
42.51
Neutral
3.98
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BTDPY, the sentiment is Negative. The current price of 10.28 is below the 20-day moving average (MA) of 10.56, above the 50-day MA of 10.27, and below the 200-day MA of 10.51, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 42.51 is Neutral, neither overbought nor oversold. The STOCH value of 3.98 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BTDPY.
Barratt Developments Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $15.12B | 11.32 | 17.03% | 0.70% | 1.11% | -10.03% | |
77 Outperform | $6.44B | 8.61 | 12.87% | ― | 6.98% | 9.74% | |
70 Outperform | $4.10B | 10.46 | 10.70% | 1.76% | -10.01% | -27.81% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $7.08B | 25.63 | 2.73% | 4.00% | 37.52% | 18.46% | |
60 Neutral | $28.50B | 14.55 | 8.26% | 1.91% | -3.78% | -44.21% | |
60 Neutral | $5.18B | 12.10 | 8.76% | 2.62% | -6.06% | -32.39% |
* Consumer Cyclical Sector Average
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Barratt Developments
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-3.17%
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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.