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Evolution Securities has upgraded its rating for Wolseley (WOS) from "neutral" to "buy", with a target price of 2,200p. The broker notes that shares in the heating and plumbing company have fallen by a third since February 2011, which is a material under-performance relative to the market. The group's disposal of Build Centre and Brossette for 310 million pounds was over 100 million pounds more than the broker expected and alleviates it of two of its largest problem assets. Additionally, it will leave the balance sheet with low gearing, and allow Wolseley to being a new acquisition programme.
In order to focus on its core markets, builders' merchant Wolseley (WOS) has agreed to the disposal of its subsidiary Build Center for 145 million pounds. It has also entered into talks for the sale of Brossette for 165 million pounds. The transactions "are the last significant disposals planned following last year's strategic review", said Chief executive Ian Meakins, and follow the sale of another subsidiary, Electric Center, earlier in the month. The funds generated from these operations will be used to reduce the company's debt. Shares in Wolseley gained 9p to 1,915p.
In a move to focus on its core business, Wolseley (WOS) has agreed to sell its Electric Center business, which has net assets valued at 29 million pounds, for an undisclosed amount to Edmundson Electrical. "This transaction is in line with our strategy of focusing on businesses where we can create leading market positions", commented Ian Meakins, chief executive of Wolseley. The shares fell 62p to 1,912p.
Says Robert Sutherland-Smith of UK350.com So with a confidence-building first half, what about the future? Those watching Wolesley's progress estimate that top line revenue should rise some 3% this year and a further 5.5% next year to a forecast estimate of GBP14.3 billion of turnover. So that makes the last gearing figure look reasonable in a recovery phase. In valuation terms, it also means that Wolesley equity is conservatively capitalised at 37% of the value of projected estimated sales revenue. In other words, the share price of 1,960.5p last seen generated estimated sales per share of 5358p of sales. Earnings per share, having fallen nearly 19.5% last year, are estimated to increase by 81% this year to 134p per share, and an estimated 29% next year to 172.5p per share. That makes projected estimated dividend payouts 44p for the current year, and 56p next year, look credible. In short, I estimate that Wolesely shares, at 1,960.5p last seen, are selling on a forward estimated price to earnings ratio of 14.6 times for the current year, falling to 11.4 times for next year. The shares are also estimated to generate a forward well covered dividend payout of 2.2% for this year and 2.9% for next year. Given that the last published balance sheet showed attributable assets worth 1,235p, that makes Wolesely shares look good value at 1971p. Buy.
Wolseley was playing a very straight bat yesterday on the potential disposal of three UK builder’s merchants businesses. The story broke at the weekend and was responsible for a 3%-plus rise in the shares when the market opened on Tuesday. The shares have flattened off lately and sell on 12 times next financial year’s earnings. Hold for further signs of recovery, the Times says.
Wolseley is recommended as a sell by Panmure Gordon at 2,074.00p.
S JONATHAN
Builders merchant Wolseley expanded like a maniac prior to the US housing slump, whereupon it downsized itself as fast as it could to reduce gearing during the credit crunch. Things have stabilised now and Charles Stanley is expecting a strong set of interim results, with underlying profit before tax more than doubling to £230m from £112m the year before. Last year’s interim results were chock full of exceptional items, amortisation of intangibles and other items that get accountants excited, the broker noted. “This year, Wolseley should present a clean and strong set of numbers and hopefully the balance sheet will show further deleveraging to pave the way for a dividend payout,” Charles Stanley said. The broker thinks a 12p dividend could be on the cards. “In the first half, the main improvement in profitability is coming from the North American market and the UK division. In the US, demand in Residential and RMI [Repair, Maintenance and Improvement] markets continued to improve though Commercial sectors remained subdued,” Charles Stanley analyst Tony Shepard wrote. “The UK profit has advanced on the back of 5% LFL [like for like] revenue growth, disposals and a lower cost base. Although new build and commercial markets remain subdued, about 40% of Wolseley’s revenues are RMI based and these continue to provide enough growth momentum for the group to improve its financial results,” Shepard reckons. “Furthermore, the group continues to benefit from cost efficiencies,” Shepard added. Charles Stanley has an "accumulate" rating on the shares. Andy Brown of Panmure Gordon retains his cautious stance on the shares, at least for now. “First quarter results from the group were good, and recent competitor data has suggested further stabilisation in trading. The US market remains the big swing factor in terms of investor sentiment. The shares have had a good run, so a strong set of results is needed to move the price up further,” Brown reckons. http://www.digitallook.com/news/sharecast/news.cgi?view=full&story=4137162&username=mulledwine&ac=210311
Ian Meakins, Chief Executive commented on trading and outlook: "This was a good first half performance, driven principally by resilient RMI markets and the considerable attention that we have paid to improving customer service, protecting gross margins and controlling costs. Construction markets have now broadly stabilised in most of our geographies, particularly the new residential and RMI segments in the USA. The overall macro-economic environment in several regions continues to be fragile and pricing competition remains intense. The impact of recent VAT increases and government spending cuts leaves the outlook in the UK more uncertain. We continue to maintain our emphasis on protecting market share and gross margins while keeping a tight control on the cost base to maximise operating leverage. The Group expects to continue to grow in the second half of the year, though the comparatives will now be much more demanding. The reinstatement of the dividend reflects the strength of our balance sheet and our confidence in the future trading prospects of the Group."
Financial Highlights § Revenue increased by 5% on a like-for-like basis. § Gross margin was 0.2% higher than last year at 27.7% despite challenging conditions. § Trading profit of £275 million was 64% ahead of last year. § Good cash generation with adjusted net debt reduced by £262 million since 31 July 2010. § Dividend reinstated - interim dividend declared of 15 pence per share. Operating Highlights § Improved trading profit and operating leverage in all geographies. § Completed three small bolt-on acquisitions. § Completed the disposal of Italy after the end of the period.
http://www.investegate.co.uk/Article.aspx?id=201103290700127810D
Wolseley restarts dividends as markets stabilise Date: Tuesday 29 Mar 2011 LONDON (ShareCast) - Building and plumbing supplies giant Wolseley bounced back into profit and reinstated its dividend as its core markets in Europe and the US both stabilised. Profits for the half year to January came in at £195m, compared to a loss of £261m, with trading profits up 64% at £275m. Revenues rose by 5% to £6.6bn. The interim dividend is 15p. "Construction markets have now broadly stabilised in most of our geographies, particularly the new residential and RMI [Repairs, Maintenance and Improvement] segments in the USA. The overall macro-economic environment in several regions continues to be fragile and pricing competition remains intense," chief executive Ian Meakin said. He added Wolseley expects to continue to grow in the second half of the year, "though the comparatives will now be much more demanding", while the impact of recent VAT increases and government spending cuts leaves the outlook in the UK "more uncertain," he said. Like-for-like revenue growth was 5% and the rate continued to improve in the first half driven principally by the US, which generated 41% of group revenue. Higher prices boosted revenue by around 3%, principally due to rising commodity prices. Wolseley also raised the gross margin by 20 basis points to 27.7% as a result of a continued focus on improving customer and product mix.
was today?have not seen any reports?
Thanks for the heads-up on the article. Bought a few last week. That would be some increase though; in just three years! Cheers.
dipped toe in water with 2303 shares.article in mail buisness by citigroup today saying shares could hit 45 pound in 3 years time.lets see where we go from here?
Can anyone tell me how this companies shares can be so popular.
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i used to spread this and its a nightmare
Times and Investors Chronicle mention of Wolseley; http://business.timesonline.co.uk/tol/business/markets/article6984298.ece
looks like it tracking downg with the builders which have plummeted approx 20% in recent months.got out recently at just over £14
can this downward trend have? anyone have any take on this?
Wolseley, the plumbers’ merchant, said underlying trading profit was down by more than a quarter in the three months to end-October from a year ago. Revenue during the period from continuing operations fell 13%, or 20% at constant exchange rates (CER), to £3,395m
http://www.investegate.co.uk/Article.aspx?id=200911180700066653C
Wolseley engineers a rise http://thescotsman.scotsman.com/business/Wolseley-engineers-a-rise.5755597.jp
http://www.investegate.co.uk/Article.aspx?id=200910051403542445A