Despite a few dips here and there for the first 4 and a half months of the year Travis Perkins was doing pretty well, climbing to a 9-ish month high of £17.10 by early May. However, since then the stock has seriously struggled, eventually falling to a 9 month low of £14 in mid-September. Travis Perkins PLC (LON:TPK) now sits at a current trading price of £14.63.
So what’s been going on at the builders’ merchant? Well even during its January to early-May climb the stock was having to ignore some bad news, with March’s 2.7% jump in full year like-for-like sales overshadowed by a huge 67% plunge in pre-tax profit to £73 million.
Yet the sharp decline seen after those results gave way to a rapid rise across April, fuelled by: a) Theresa May’s snap election announcement, and b) Q1 figures at the end of the month that showed that like-for-likes grew 2.7%, even with a 2.6% increase in its prices.
A bit of a wobble in May was then overcome by the end of the month, only for Travis Perkins to be hit by a truly miserable June, where the entire retail sector struggling under a combination of the shock election result, soaring inflation, falling real wages and fears of an economic slowdown.
August’s half year results weren’t particularly pretty either. While revenue jumped 3.5% to £3.2 billion, pre-tax profit slipped 4.5% to £168 million in part due to rising input costs. CEO John Carter also sounded rather dour, arguing ‘with DIY you are competing against holidays, sofas and new cars’, and that thanks to low ‘consumer confidence and worries about the economy’ people are opting to for some time abroad rather than home improvement.
Thing is, for all its troubles Travis Perkins has maintained some pretty solid comparable sales growth, with like-for-likes up 2.7% in the first half of the year, explaining the reiterated ‘Buy’ ratings from Citigroup (NYSE:C) and Liberum Capital this week. If the company can post similar third quarter figures next Thursday, alongside an update on its latest attempt to restructure its flagging plumbing and heating business, investors may be willing to get back on board.
Travis Perkins PLC has a consensus rating of ‘Buy’ with an average target price of £16.79.
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