Kingfisher has endured some tough times in recent years, but now the cost-cutting scheme and the uptick in the British and Irish property markets are assisting the company share price. As I previously stated, the company will close down one in six of its B&Q stores in the UK and Ireland, and remaining stores will be more tailored towards clients' needs.
In the three months until 3 May, the company posted a 1.4% jump in profits, and even though the B&Q division performed well there is still room for improvement. Given the strength in the UK property market, and the recovery in Irish house prices you would expect more demand for DIY goods. The wholesale side of the business is outstripping the retail operation, and the Screwfix chain revealed a 15.4% rise in first-quarter revenue.
A pleasant surprise was the near 39% surge in sales at its Russian business, and it is though that the homeowners in the country brought forward refurbishment spending in advance of the rouble weakening. This will not be a regular occurrence and should be taken as a one-off rapid rise in revenue.
When Kingfisher reveals its first-half figures, traders are expecting revenue of £5.35 billion. The company will announces its full-year results in May 2016, and the market is anticipating revenue of £10.35 billion and adjusted net income of £510 million. These forecasts represent a 5.5% drop in revenue and a 3.4% increase in adjusted net income.
Equity analysts are a touch on the bullish side when it comes to Kingfisher, and out of the 26 recommendations, seven are buys, 10 are holds, and nine are sells. The average price is 355p, which is 2.7% below the current price. Investment banks are more bullish on Home Retail Group, and out of the 18 ratings, eight are buys, six are holds, and four are sells. The average target price is 171p, which is 24% above the current price.
The share price has been pushing higher since July 2008, and the resistance at 420p is the target. The August low of 335 should provide support if the stocks drifts lower, but if it is taken out the next level of support will be found in the 280p area.