Can Ferguson – formerly Wolseley (LON:FERG) – hold at its all-time highs following next Tuesday’s Q3 results?
After a bit of a rocky start the buildings material distributor has been in fine form in 2018. Opening at £53.15, the stock managed to cross £60 for the first time in its history in mid-June, the brunt of that rise coming from mid-April onward. Ferguson PLC now sits at £60.67, a 14% increase since the start of the year.
(Source: Spreadex, 13/06/2018)
Though the gains garnered by its half year results at the end of March didn’t last long, the report is arguably responsible for positive glow currently encasing the stock. For the 6 months to 31st January 2018 revenue from ongoing businesses rose 10.3% to $10.027 billion (a 9% increase at constant exchange rates, and a 7.4% jump in terms of organic growth).
Statutory pre-tax profit climbed 7.6% to $598 million, with a 10% jump in the interim dividend to 57.4 cents per share. The real highlight, however, was a proposal of $1 billion special dividend – amounting to $4 per share – and share consolidation.
Clearly, Ferguson has a lot of money – and it intends to spend it. In the first half the firm splashed $116 million on 6 acquisitions, and said its expenditure could reach $400 million by the end of the year, with the aim of strengthening its core – so core in fact that it accounts for 95% of revenues – business in US and Canada.
Investors, then, will want to hear about any potential purchases on the horizon. Signs of improvement in the ‘challenging’ UK market would be also welcome, while the avoidance of a notable slowdown from the first half’s growth, despite ‘progressively tougher’ comparatives in H2, would also be cheer worthy.
Ferguson PLC has a consensus rating of ‘Buy’ alongside an average target price of £59.03.
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