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Highlights:
- Bunzl's group revenues grew 5.8% at constant currency, supported by acquisitions, despite a 1.2% organic revenue decline.
- Recent acquisitions include Cermerón in Spain, Cubro Group and DBM Medical Group in New Zealand, and Arrow County Holdings in the UK.
- Bunzl’s shares trade at a 2025 P/E ratio of 17x, with analysts maintaining a 'hold' rating due to deflationary and volume pressures.
Bunzl PLC (LSE:BNZL) shares fell 2.8% this morning, making it the biggest faller on the FTSE 100, despite reporting positive revenue growth for the third quarter. The company's stock retreated further from its recent all-time high, even as it delivered an improved sequential organic revenue performance, with a modest decline of 1.2%.
Group revenues grew by 5.8% at constant currency, largely driven by acquisitions, which contributed 6.8% to the growth. The acquisition momentum continued with the announcement of several new deals. In August, Bunzl acquired Cermerón, a regional distributor of cleaning and hygiene products in Southern Spain. September saw the acquisition of New Zealand’s Cubro Group, a distributor of mobility aids and clinical furniture, and DBM Medical Group, a specialist distributor of orthopaedic surgery products. Most recently, in October, Bunzl added Arrow County Holdings, a UK distributor of cleaning and hygiene products, to its portfolio.
While the company continues to show resilience through acquisitions, underlying trading trends have remained subdued, largely due to deflationary pressures and lower volumes, according to analysts. However, Bunzl’s profit margins have remained steady, and its updated capital allocation policy, including ongoing share buybacks, is expected to provide some support for the stock price.
On valuation, analysts at Stifel noted that Bunzl shares are trading at a 2025 price-to-earnings ratio of 17x, which is in line with the company's historical average. While they maintain a 'hold' rating, they are closely monitoring trading conditions, especially in light of current deflationary and volume challenges.
Bunzl's strategy of growth through acquisitions and its ability to maintain resilient margins amid challenging market conditions underscore the company’s long-term potential. However, with trading pressures still present, analysts remain cautious on the outlook for further stock price gains in the near term.
