Market's view on Kingfisher
Published on April 2024
- Expectations of a retest at 200p for KGF stock after a third profit warning.
- An increase in DIY activities noted due to stagnant house prices and an upcoming election budget likely bolstering this trend.
- Mixed reviews on the value of home improvement stores, with Brico Depot praised for basics in France, and concerns about changes at B&Q and Screwfix in the UK.
- Brico Depot’s role in France alongside Castorama highlighted, with a focus on the operational shifts and financial forecasts in light of market conditions.
- Deutsche Bank lowered its target price on Kingfisher due to disappointing quarterly results and revised full-year forecasts, citing economic slowdown in France and weak consumer spending.
- Comparison of dividend yields with savings account rates, questioning the attractiveness of Kingfisher’s stock in current financial conditions.
- Investment sentiment suggests Kingfisher as a defensive stock with a reasonable yield, despite recent cuts in profit guidance and operating challenges in various regions.
- Discussion on high returns from Screwfix and potential for significant valuation increase if stability returns to the housing market.
- Concerns raised about the profitability trend in France and the impact of reduced guidance on pre-tax profits compared to a decade ago.
- Kingfisher’s historical and future financial strategy discussed, including debt levels, shareholder returns, and the impact of market competition from online retailers like Amazon.
- Positive outlook on Kingfisher’s robust management and international operations, despite the non-glamorous perception of the company potentially affecting its popularity as an investment.