Berkeley stock was down 36% in September. It has made some recovery since then, and now it's only down 22% for the year. Will this momentum continue?
Overview
Located in Cobham, England, The Berkeley Group Holdings plc is a British real estate developer and home builder. It is a component of the FTSE 100 Index and is traded on the London Stock Exchange.
Financials
Looking at the company’s yearly results which ended on 30th of April 2022 against 2021. The revenue went up to £2.35bn from £2.2bn and gross profit went p to £664m for the year from £635m. Profit after expenses and tax was reported at £482m, which was a £60m increase year-on-year. As a result, earnings per share came in at 417.8p in 2022 versus 339.4p in 2021. Furthermore, total assets rose to £6.6bn from £5.6bn, however, total liabilities grew to £3.45bn from £2.4bn in 2021. Hence, the total equity of the company fell slightly by £39m to £3.14bn for the year. The reason for the mild decline in equity was that the company took on additional liabilities through borrowings, trade and other payables.
Technicals
From a technical aspect, its shares are currently trading at £38.08 a share. Towards the upside, resistance sits at £38.17 then at £38.35 then at £38.52. A break above these points could see its stock price head towards the major resistance level at £39.19 (red oval). On the other hand, towards the downside, support sits at £37.84 then at £37.74 then a £37.56. A slip below these levels may see the price decline towards the key support level at around £36.89 (correspondent with the ascending orange trendline). Looking at the technical indicators, MACD is slightly negative but swaying towards neutral and RSI is neutral as it reads 48.
Summary
On the basis of the financials, the company has seen a slight decline in total equity due to additional borrowings and other payables, however, they continue to generate more revenue and profit year-on-year. At present, it is a profitable business and equity should continue in a positive direction in the next few years to come as the decline was minimal. Unless liabilities start to outweigh the assets increasingly, Berkely should continue to grow and expand into the near future with positive financials. Based on the technicals, at end of September 2022, the stock was down 36% for the year. It has climbed since then and now it is only down 22%, support below seems fairly established with minor dips and bounces higher. There is potential for this stock to recover more of its losses in the new year, but that will be much dependent on the financial performance of the company. Investors should be wary as any negative reports or big losses may knock the momentum, leading to a bearish trend if a sharp break through support occurs.
