Market's view on DCC
Published on April 2024
- DCC acquired eenergy’s energy management business for £30 million, but without issuing a press release.
- Stock price is over £56, with RBC setting a target of £55, suggesting expectations for continued price rise.
- Company reported a 12% increase in adjusted operating profit and acquired a German LPG distributor for €160 million.
- Energy division expanded with five new acquisitions, focused on reducing carbon emissions, with a goal to double profits by 2030.
- Concerns raised about the current management’s capability compared to the entrepreneurial predecessors.
- Criticism over the dividend’s relevance with rising money market rates offering over 4%, highlighting the market’s lack of confidence in DCC’s strategy.
- Upcoming AGM expected to address the ongoing decline in market cap and potential actions by management.
- DCC primarily remains an oil and gas distribution business, with significant declines in its healthcare and tech sectors.
- Review in The Sunday Times described DCC as a market darling turned dud, potentially vulnerable to activist investors.
- Suggestions of a possible profits warning or business restructuring due to low share price and PE ratio.
- Broker downgrades noted, with Barclays setting a target of £41, amidst absence of share buybacks or insider buying.
- Continuous underperformance in share price despite revenue and profit increases, alongside substantial rise in net debt.