Grafton Group

Another forecast upgrade following StairBox acquisition

  • Sectors : Builders Merchants
  • Companies : Grafton Group

Ratings and price correct at time of issue.

  • Grafton Group

    Closing Price: 865p

  • RATING 07/10/20

  • PREVIOUS RATING 21/05/20

    NEUTRAL

DAVY VIEW

Grafton has been an astute investor and the acquisition of StairBox should maintain this trend. The deal is at an attractive valuation (7.2x trailing operating profit), represents a good use of Grafton’s considerable financial capacity and augments the group’s portfolio of differentiated, higher margin businesses. StairBox is earnings enhancing and we upgrade our 2021 trading profit forecast by 3%. This continues the recent momentum, with 2021 earnings estimates having now increased by almost 30% since May. The stock has responded recently (up over 25% in the past month), but we continue to believe there is further to go and that it can trade up towards the £10 level.

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Dec 3 2020, 07:05 GMT

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