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The FTSE 100‘s enjoyed an electrifying year of gains, yet remains packed with brilliant bargains.
Barratt Redrow (LSE:BTRW) is one that caught my eye this January. With low earnings multiples and price-to-book (P/B) ratios, and enormous dividend yields, I think it could be too cheap to miss.
Wanna know why? Read on.
A FTSE bargain
Housebuilder Barratt has had several tough years, as higher interest rates have hammered demand for new homes. But profits are tipped to rebound from 2026, chiefly as the Bank of England is expected to keep reducing its lending benchmark.
This means Barratt shares trade on a price-to-earnings growth (PEG) ratio of 0.1 for this year. Any reading below 1 suggests a share’s undervalued relative to expected earnings growth.
Furthermore, the builder’s PEG readings remain around rock-bottom levels, at 0.4 for both 2027 and 2028.
I’m not surprised by City analysts’ bright earnings forecasts (they’re tipping growth of 98% for this year). Interest rates are falling, as I say, but that’s only one part of the story. Accelerating competition in the mortgage market is also helping homes demand to ignite once again.
Moneyfacts says that “expectations are high for a booming market in 2026“. It follows news that mortgage product choice has hit its highest level since 2007, with 7,158 options now on the market. With challenger banks ramping up their attacks on traditional banks and building societies, pent-up housing demand is steadily being unlocked.
Too cheap to miss?
Barratt Redrow is the UK’s largest housebuilder, and is therefore in the box seat to capitalise on resurgent homes demand. It’s planning to build between 17,200 and 17,800 homes this financial year, and to eventually ramp this up to 22,000 a year over the medium term.
Of course there are risks to these targets. A prolonged downturn in the UK economy, accompanied by rising unemployment could impact any sales recovery. So might returning inflationary pressures that could limit future interest rate cuts.
But on balance, I think Barratt’s worth serious consideration, and especially with its share price at current levels. It looks cheap based on expected earnings, as I’ve shown, while its P/B ratio is also mega low. This sits below the value threshold of 1 as well, at 0.7.
A FTSE 100-beating dividend yield of 4.2% for 2026, and which rises to 4.7% and 6.2% for 2027 and 2028 respectively, sweetens the investment case.
Bottom line
I own Barratt Redrow shares in my own portfolio, along with other major housebuilders Persimmon and Taylor Wimpey. I’ve clung onto them despite the pressures of the past years, and plan to keep them long into the future.
With a packed land bank — at 100,000 plots, or 6.2 years of supply — this FTSE 100 company’s well placed in my opinion to capitalise on the UK’s booming population. I expect it to deliver solid returns over the coming decade.
