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I’ve had a high UK progress inventory on my ‘purchase’ listing 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 sort of firm that doesn’t make headlines however retains delivering. Quietly lifting income, 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. That may lastly be altering.
Bunzl shares wobble
Bunzl gives the unglamorous however important gadgets that maintain hospitals, retailers and factories ticking over: gloves, packaging, paper towels, cleansing package and the like.
It’s constructed a powerful enterprise by snapping up smaller rivals across the globe. Final 12 months, it sealed 13 offers price £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 largest 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 value is now down virtually 25%. The value-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 keep in mind.
Again on monitor?
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 monitor to rise 4% at fixed trade charges, with acquisitions doing a lot of the lifting. Working margins are forecast to sit down round 7%, down somewhat on current years, however with room to enhance later within the 12 months. Buyers could have priced that enchancment in by now, after all. Bunzl should beat it, to raise the shares.
The long-term file nonetheless stands out. It has now grown its dividend yearly for 32 years. Over the previous 15, payouts have risen by a mean 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 shortly into falling shares. My largest portfolio regrets – Diageo, Glencore, JD Sports activities Vogue and Ocado Group – comply with that precise sample. A single revenue warning typically 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 the moment’s 2,354p.
I’d prefer to consider they’re proper. That P/E now appears to be like tempting, and if sentiment turns, restoration shares can climb sharply. Typically when buyers least anticipate it.
The worldwide outlook stays bumpy although. With tariffs, life’s more durable for worldwide firms like this one. Bunzl’s nonetheless high of my wishlist. However I’m holding fireplace for now.
