Shares in Travis Perkins (TPK), the UK’s largest distributor of building materials, are up just 1% to 991p after initially trading as high as £10.20 on the back of a solid third-quarter sales update.
On Friday the shares hit 970p, their lowest level in five years, amid the general gloom in stock markets.
The merchanting side of the business, which includes general merchandising, plumbing and heating and contracts, performed well and the company has been able to pass on price increases to trade customers.
Plumbing and heating sales were particularly strong with like-for-like sales up nearly 15% although growth will be lower in the fourth quarter as the prior-year comparison is tougher.
In the DIY market, where Travis owns Wickes, weak consumer confidence and competition from other retailers makes it hard to pass on price rises but the company says that price pressure has eased in recent weeks.
TRADING ON A YIELD OF NEARLY 5%
Overall, like for like sales are up 4.1% compared with 4.2% in the first half and volume growth has accelerated to over 2% against less than 1% which is encouraging.
This better top-line growth along with confirmation that full-year results will be in line with previous guidance means some analysts will have to nudge up their forecasts.
At the current price Travis trades on just over seven times this year’s operating profit, or an earnings yield of over 14%, and a dividend yield of 4.7%.
