I have bought a holding in Berkeley Group (LON:BKG) , the house builder focussed on London and the South East. It came to my attention as it passes no less than six growth and momentum screens on the Stockopedia website. On December 7th it reported on the six months to the 31st October 2012. The results showed revenue up 70% on the year before, operating profit up 91.4% , pre-tax profit up 40.7% and earnings per share up 38%. The Company increased its return on equity to 24.5% from 20.8%. If you didn't already know it Tony Pidgeley, Chairman and co-founder, knows how to run a house builder.
In the statement Tony Pidgely was confident about future earnings which was behind the Board's decision to pay a 15p dividend in April 2013. This will be the first distribution to shareholders since the Company returned £2 per share in January 2008. In the managing directors report Rob Perrins outlines the long term strategic plan to return £1.7bn of cash to shareholders by September 2021 through a combination of share buybacks and dividends of not less that £13 per share. There are milestones built into the plan: £568m to be returned by Sept 2015, a further £ 567m by Sept 2018 and the final £567m by September 2021. In simple terms, over the next 9 year the Company plans to return over 70% of the current market capitalisation.
The shares have been a strong performer this year, which I guess is not surprising given that at the start of the year earnings were forecast at 110p for the year to April 2013 compared to current forecasts of 135.6p.
In conclusion, on consensus forecasts the shares are valued at 12.9x to April 2013, falling to 11x the following year. That seems good value to me before one factors in the expected return of capital. I have bought a 4% holding in the JIC portfolio. (see transaction history)
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