Financial Trading Blog
Stock of the day 21/03/2016 – Kingfisher PLC
After a rather flaccid 2015 saw the company semi-recover the dramatic losses it had seen in 2014, the New Year began in a rather inauspicious fashion for Kingfisher, which swiftly hitt a 12 month low of £3.19 within the first week of trading. The stock then managed to avoid the truly stomach-churning plunge that opened 2016, nearing £3.50 as January began to wrap up; yet the company soon shot itself in the foot with its end of the month update.
(Source: IT-Finance.com 21/03/2016)
Despite revealing that it intends to increase its annual pre-tax profits by £500 million within 5 years, as well as returning £600 million to shareholders, all the whilst increasing the company’s online capabilities, Kingfisher slumped 6% as it revealed its plan. It appears investors questioned the wisdom of the company taking on such an expansive restructuring scheme, especially with the expected, and chunky, short-term impact (£50 million in the first year, £70-£100 million in the second) on its already falling profits.
The dismal reaction to the restructuring reveal left Kingfisher hovering below £3.20 for the first half of February, before the broader market recovery (only significantly interrupted by Boris Johnson’s Brexit bomb) saw the company post a relatively robust rebound, taking it to a 5 month high of £3.59. Kingfisher now sits at a current trading price of £3.51 (IT-Finance.com, 21/03/2016).
In terms of its full year figures on Wednesday analysts are expecting Kingfisher to post a 4% fall in pre-tax profit to £688 million as it begins its restructuring plan, a plan that involves the loss of 3000 jobs and the closure of 60 stores.
Kingfisher PLC has a consensus rating of ‘Hold’ with an average target price of £3.42.
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