US Edition Bunzl
849½ -5½
Questor says HOLD
Bunzl sources and supplies all the items that a business consumes - and it does so cheaper than its customers could themselves.
It provides consumables used in day-to-day business, be that coffee cups, carrier bags, labels, toilet rolls or cleaning items.
For the year ending in December 2011, Bunzl says revenue growth is expected to be more than 6pc because of "underlying revenue growth of about 3.5pc and the positive impact from acquisitions". The company also revealed that there has also been an improvement in the group operating margin – which is pretty impressive given the cost pressures facing businesses today.
Acquisitions remain an important part of Bunzl's growth strategy and this year was good for deals with 10 purchases made.
The company typically buys family-run businesses when in a new market, be that geographical or by type of business. It then uses its own scale to cut costs and drive the business.
Bunzl has increased its dividend every single year since 1992 and the prospective yield in 2012 is 3.2pc, rising to 3.3pc next year. This is worthwhile but not spectacular. First tipped at 571p on December 21, 2008, they are now 49pc higher, compared with a FTSE 100 up 25pc.
The shares are now trading at all-time highs – but are still at a discount to its historic earnings multiple of 15 times. The current year multiple is 12.9, falling to 12.1 but, given the market backdrop, it could be some time before equities move back to historic levels.
Therefore, following a strong run, shares in this well-managed business are now a hold.