Down 32% and with a P/E of 9.5, is this FTSE 250 share too cheap to ignore?
It’s been a tough few weeks for the FTSE 100 and FTSE 250‘s housebuilding shares. Bellway (LSE:BWY) for instance has sunk 32% in value over the past month, reflecting worries over future interest rates.
In fact, it’s down a further 10% on Tuesday (24 March) after releasing first-half trading numbers. At £19.21 per share, its price-to-earnings (P/E) ratio has slumped to 11.5 for this financial year (to July 2026). For financial 2027, this drops to 9.5.
The question is, are Bellway shares now irresistible at today’s prices?
What’s happened today?
The FTSE 250 builder’s falling furiously after slashing full-year forecasts. Chief executive Jason Honeyman commented that “the ongoing conflict in the Middle East heightens the risk of both inflationary cost pressures and an impact to customer demand, and we have already seen volatility return to the mortgage market.”
Underlying operating profit for this financial year’s now tipped at between £320m and £330m, below broker estimates of £334m. The business also trimmed the underlying operating profit margin target to 10.5%, down around half a percentage point.
For the first half, Bellway actually performed pretty strongly. Revenues of £1.5bn were up 6.3% year on year, and slightly ahead of broker estimates as completions and selling prices rose.
Underlying operating profit increased 1.5% to £159m, though this wasn’t as impressive. The underlying operating profit margin dropped to 10.5% from 11%, causing the bottom line to miss forecasts.
Still, Bellway’s first-half performance was largely robust. And it encouraged the business to raise its full-year completion target to 9,300-9,500 homes from 9,200 previously.
Weakness appearing
Markets are forward looking, so it’s no surprise investors chose to focus on Bellway’s reduced profit expectations going forwards. And especially as Bellway is already showing signs of trouble.
As of 16 March, the builder’s forward order book was 5,311 homes, down 4.9% year on year. And its order book value was down 1.9% at £1.5bn.
Weekly private reservation rates per outlet since 1 February have also dropped to 0.7 from 0.76 in the same 2025 period.
Bellway has said “the situation in the Middle East has not had a material impact on trading” at the moment. But investors are asking, how bad could things get as interest rates and mortgage products become less favourable for buyers?
Are Bellway shares a potential buy?
As I say, Bellway’s share price drop leaves it trading on rock-bottom P/E ratios. But that’s not all — the builder’s price-to-earnings growth (PEG) ratio remains below 1 for both the next two financial years. At 0.3 and 0.4, in fact, it’s well below inside value territory.
Today’s price weakness has also pumped the dividend yield to a chunky 3.6% for this year. It rises to 4.2% for fiscal 2027.
So is the FTSE 250 stock a top value share? I think it’s worth serious consideration, as from a long-term perspective the housing industry outlook remains robust, driven by government policy and the UK’s booming population. But investors need to be prepared for some serious volatility in the meantime.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
