Survey finds that construction sector is the most undervalued by the stock exchange, with housebuilders at the bottom of the pile.
Contractors and housebuilders were this week confirmed as the most undervalued companies on the stock market, according to a survey by accountancy and business advisory firm RSM Robson Rhodes.

The findings, published in The Sunday Times come despite a flurry of interest in the sector after two large housebuilding takeovers. Of the 50 most undervalued businesses on the list 17 are contracting and housebuilding firms. Twelve are in the bottom 20.

Housebuilder Prowting did worst out of the construction firms, coming fourth from bottom overall. Taylor Woodrow and Persimmon also featured in the bottom 20.

One analyst, who said he was not surprised by the findings, claimed that the industry had got what it deserved for not embracing consolidation. He said: "Most housebuilders have let the market down. Some of the companies on the list are extremely well run but longer term, the market wants to get out of them."

Housebuilders account for eight of the bottom 20 companies. Many, such as Crest Nicholson, Wilson Connolly and Alfred McAlpine, are strongly tipped to be involved in the next wave of consolidation.

The findings add weight to the call for more consolidation, with analysts saying the the survey illustrates once again that there are too many players in the market, leaving no-one big enough to attract interest from major financial institutions.

One analyst said: "It is very hard to build up a business into a £2bn-a-year earner with only 150 000 houses to be built per year in Britain. There's too many out there."

Another analyst said going private was an option for the firms on the list to consider, in the wake of action taken by smaller housebuilders Linden and Fairview.