Can Bunzl (LON:BNZL) make a bundle with Wednesday’s pre-close trading statement?
A bad end to 2017 left the multinational distribution and outsourcing firm in a precarious position at the start of 2018, the stock bouncing between 2 year lows of £19.30 and £20.50 for the first quarter. However, things picked up quite sharply from April onwards, with the company very briefly hitting a 12 month peak of £23.59 by mid-June. Bunzl PLC now sits at a current trading price of £22.87.
Following on from February’s full year report, which saw a 16% jump in revenue to £8.58 billion alongside a 13% rise in pre-tax profit to £409.3 million, the firm’s most recent update came in April. There Bunzl revealed that first quarter revenue had risen 7% at actual exchange rates, growth that doubles to 14% when measured at constant exchange rates.
It also announced it had bought the US-based Monte Package Company, which distributes packaging products to fresh food grocers and Dutch firm QS Nederland, a hygiene services for bathrooms provider, for an undisclosed sum.
In terms of Wednesday’s statement, investors can perhaps expect a slight slowdown in revenue. That’s because Bunzl warned back in April that the Q1 growth was fuelled by ‘the additional grocery business’ won in the US at the end of 2016, with underlying revenue growth set to ‘return to more normal levels during the reminder of the year as the additional business in North America has now been fully absorbed’. What exactly those ‘normal levels’ translate to will be key in determining whether or not Bunzl can return to £23.50.
Bunzl PLC has a consensus rating of ‘Hold’ alongside an average target price of £24.06.
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