Down 32% and with a P/E of 9.5, is this FTSE 250 stock too cheap to ignore?
Image source: Getty Images
It has been a difficult few weeks for the FTSE 100 again FTSE 250house building assignments. Bellway (LSE:BWY) for example has fallen 32% in the past month, reflecting concerns about future interest rates.
In fact, it fell again by 10% on Tuesday (24 March) after releasing the trading numbers for the first half. At £19.21 a share, the price-to-earnings (P/E) ratio has fallen to 11.5 for this financial year (to July 2026). In fiscal 2027, this drops to 9.5.
The question is, are Bellway shares now unstoppable at today’s prices?
What happened today?
The FTSE 250 index falls sharply after cutting full-year forecasts. CEO Jason Honeyman commented that “ongoing conflict in the Middle East increases the risk of both cost-push inflation and the impact on consumer demand, and we’ve already seen volatility return to the commodity market..”
Underlying operating profit for the financial year now stands at between £320m and £330m, below broker estimates of £334m. The business also lowered its underlying operating profit margin to 10.5%, down nearly half a point.
In the first half, Bellway actually did very well. Revenue of £1.5bn was up 6.3% year-on-year, and slightly ahead of dealer estimates as completions and sales prices rose.
Underlying operating profit rose 1.5% to £159m, although this did not impress. Core operating profit margin fell to 10.5% from 11%, causing the bottom line to miss forecasts.
Still, Bellway’s first-half performance was solid. It also encouraged business to raise its full-year completion target to 9,300-9,500 homes from 9,200 previously.
Weakness appears
Markets are bullish, so it’s no surprise that investors have chosen to focus on Bellway’s reduced earnings expectations going forward. And especially since Bellway is already showing signs of trouble.
As of March 16, the builder’s forward order book was 5,311 homes, down 4.9% year-over-year. And its order book value fell by 1.9% to £1.5bn.
The average weekly private bookings per destination from 1 February also fell to 0.7 from 0.76 for the same period in 2025.
Bellway said “the situation in the Middle East did not have a material impact on trade” for now.” But investors are asking, how bad can things get as interest rates and mortgages ease for consumers?
Can Bellway shares be bought?
As I say, the decline in Bellway’s share price leaves it trading at rock-bottom P/E ratios. But that’s not all – the builder’s price-to-earnings growth (PEG) ratio remains below 1 for both of the next two fiscal years. At 0.3 and 0.4, it is, in fact, well below the value area.
Today’s price weakness has boosted the dividend yield to a chunky 3.6% this year. It rises to 4.2% in 2027.
So is the FTSE 250 stock an overvalued stock? I think it is worth serious consideration, as from a long-term perspective the outlook for the housing industry remains strong, driven by government policy and the UK’s population growth. But investors need to be prepared for more volatility in the meantime.
