Travis Perkins (LON:TPK) Releases Quarterly Earnings Results

Travis Perkins (LON:TPK) posted its earnings results on Tuesday. The company reported GBX 15.10 earnings per share (EPS) for the quarter, Digital Look Earnings reports. Travis Perkins had a negative return on equity of 9.35% and a negative net margin of 3.86%.

Here are the key takeaways from Travis Perkins’ conference call:

• Adjusted operating profit rose 6.3% to £67 million despite difficult trading conditions, supported by a 100-basis-point improvement in gross margin and cost reductions.
• The group strengthened its balance sheet, moving to £55 million of net cash before leases from £103 million of net debt a year earlier; leverage fell to 1.9x, within its 1.5x–2.0x target range.
• Management expects the challenging market backdrop to continue in the second half and is guiding to a trading performance similar to the first half, while continuing to pass through supplier price increases and avoid low-margin or high-credit-risk business.
• Travis Perkins reported progress in its general merchanting operations, including a mid- to high-single-digit profit improvement, while Toolstation UK plans to expand from roughly 590 to 650 locations and has surpassed 900,000 loyalty-club members.
• Residential new-build weakness, rising construction-company insolvencies, and deterioration at CCF remain significant risks; the group is also reviewing Toolstation Benelux, with discussions underway with potential third parties regarding its future ownership.

Travis Perkins Price Performance

TPK stock opened at GBX 681 on Wednesday. The stock’s 50 day moving average is GBX 553.41 and its two-hundred day moving average is GBX 584.87. Travis Perkins has a 52-week low of GBX 493.40 and a 52-week high of GBX 723.50. The company has a market capitalization of £1.44 billion, a PE ratio of -8.18, a P/E/G ratio of 6.44 and a beta of 1.28. The company has a quick ratio of 0.84, a current ratio of 1.72 and a debt-to-equity ratio of 59.00.

Wall Street Analyst Weigh In

Several research firms recently commented on TPK. Berenberg Bank boosted their price target on Travis Perkins from GBX 580 to GBX 650 and gave the stock a “hold” rating in a research report on Wednesday. Jefferies Financial Group dropped their price objective on shares of Travis Perkins from GBX 507 to GBX 464 and set an “underperform” rating on the stock in a research note on Monday, April 20th. Peel Hunt reissued a “buy” rating and set a GBX 660 target price on shares of Travis Perkins in a research report on Tuesday. Finally, JPMorgan Chase & Co. decreased their target price on shares of Travis Perkins from GBX 680 to GBX 630 and set an “overweight” rating for the company in a research note on Tuesday, May 19th. Three equities research analysts have rated the stock with a Buy rating, one has issued a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat, Travis Perkins presently has an average rating of “Hold” and a consensus target price of GBX 630.80.

Key Travis Perkins News

Here are the key news stories impacting Travis Perkins this week:

• Positive Sentiment: First-half profit increased despite softer market conditions. Pricing actions and cost savings supported margins, while management highlighted progress in the turnaround and improvements to the balance sheet. Reuters report on Travis Perkins half-year profit
• Positive Sentiment: The company reported quarterly EPS of GBX 15.10, and investor attention has focused on margin expansion and better cost control as evidence that Travis Perkins is moving in the right direction. Investors Chronicle analysis
• Positive Sentiment: Peel Hunt reaffirmed its “buy” rating and set a GBX 660 price target, indicating continued confidence in the company’s recovery potential. Digital Look broker updates
• Neutral Sentiment: Berenberg raised its price target from GBX 580 to GBX 650 but retained a “hold” rating. The higher target reflects improved operating expectations, while the cautious rating suggests limited upside after the recent rally. Digital Look broker updates
• Negative Sentiment: Revenue declined in the first half, and management indicated that a recovery in the merchanting business is still awaited. Persistently weak construction demand remains the main risk to sustaining the margin gains. LSE report on Travis Perkins half-year results

About Travis Perkins

Travis Perkins plc engages in distribution of building material products in the United Kingdom. It operates through Merchanting and Toolstation segments. The company offers tools and building supplies. It also distributes pipeline products, as well as supplies managed services, and commercial and industrial heating and cooling solutions. In addition, the company provides in specialist civils and drainage solutions; and air-conditioning and refrigeration products and heat pumps. Further, it provides insulation and interior building products to interior building specialists, contractors, and builders; and kitchens and joinery products.