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I’ve had a high UK development inventory on my ‘purchase’ checklist for years. The primary time I wrote about it, yonks in the past, I referred to as it the last word FTSE 100 darkish horse. Why? As a result of it’s the form of firm that doesn’t make headlines however retains delivering. Quietly lifting earnings, increasing the enterprise and lifting dividends 12 months after 12 months.
The inventory in query is Bunzl (LSE: BNZL). I’ve admired it for ages however by no means fairly discovered the fitting time to pounce. Which may lastly be altering.
Bunzl shares wobble
Bunzl offers the unglamorous however important objects that maintain hospitals, retailers and factories ticking over: gloves, packaging, paper towels, cleansing equipment and the like.
It’s constructed a robust enterprise by snapping up smaller rivals across the globe. Final 12 months, it sealed 13 offers value £883m, and it hasn’t let up in 2025 both, buying Solupack in Brazil simply final month.
In April, its ahead march hit a bump within the highway, when the board issued a revenue warning after a rocky begin to the 12 months. North America, its greatest market, struggled with mushy demand and rising prices, whereas Europe and the UK got here underneath stress too. The shares crashed 23% in a day.
That was a shock for long-time followers like me. Over 12 months, the share worth is now down nearly 25%. The worth-to-earnings (P/E) ratio has dropped to 11.98 instances, simply the most affordable I can recall. The dividend yield is nudging 3.2%, the best I can bear in mind.
Again on observe?
Yesterday’s half-year replace (24 June) introduced some reassurance. Bunzl mentioned buying and selling had met expectations, regardless of the murky international financial outlook. The corporate expects the second half to be stronger, helped by administration efforts to spice up efficiency, particularly in North America and continental Europe.
First-half income is on observe to rise 4% at fixed change charges, with acquisitions doing many of the lifting. Working margins are forecast to sit down round 7%, down just a little on latest years, however with room to enhance later within the 12 months. Traders may have priced that enchancment in by now, in fact. Bunzl should beat it, to raise the shares.
The long-term document nonetheless stands out. It has now grown its dividend yearly for 32 years. Over the previous 15, payouts have risen by a median of 8.56% a 12 months. That’s consistency.
Nonetheless watching
Even so, I’m treading rigorously. I’ve been burned earlier than by leaping too rapidly into falling shares. My greatest portfolio regrets – Diageo, Glencore, JD Sports activities Vogue and Ocado Group – observe that precise sample. A single revenue warning usually results in one other, and the losses can spiral. So I’m not diving in simply but.
Analysts are break up. Of the 18 masking Bunzl, three charge it a Sturdy Promote and one other says Promote. The bulk nonetheless lean in the direction of Purchase, however solely simply. They’re pencilling in a 12-month goal of two,700p, which might imply a 15% achieve from at this time’s 2,354p.
I’d prefer to consider they’re proper. That P/E now seems to be tempting, and if sentiment turns, restoration shares can climb sharply. Typically when traders least count on it.
The worldwide outlook stays bumpy although. With tariffs, life’s harder for worldwide firms like this one. Bunzl’s nonetheless high of my wishlist. However I’m holding fireplace for now.
