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1. Company Snapshot

1.a. Company Description

Travis Perkins plc distributes building materials to the building, construction, and home improvement markets in the United Kingdom.It operates through, Merchanting, and Toolstation segments.The Merchanting segment distributes interior building products, which include drywalls, ceilings, external envelopes, fire protection products, flooring and partitioning products, and tools and accessories to professionals within the construction industry; civil, drainage, and heavy building materials to specialist contractors and trade professionals; and pipeline and heating solutions.


This segment also distributes building materials, plumbing and heating products, landscaping materials, timber and sheet materials, painting and decorating products, dry lining and insulation products, doors and joinery, and hand and power tools to trade professionals and self-builders.The Toolstation segment supplies products to the trade, home improvers, and self-builders industry through approximately 500 branches, as well as online, call centers, and a mobile website.It also offers kitchens and joinery products to specialist joiners, kitchen fitters, house builders, local authorities, and national house builders.


The company was formerly known as Sandell Perkins Public Limited Company and changed its name to Travis Perkins plc in October 1988.Travis Perkins plc was founded in 1797 and is headquartered in Northampton, the United Kingdom.

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1.b. Last Insights on TPK

Travis Perkins' recent performance was impacted by a challenging trading environment, with soft demand in its end markets. The company's first-half earnings revealed a modest improvement in EPS, but trading conditions remained tough. Weak macroeconomic data, including soft US data, have tempered market gains. With no major acquisitions or new product launches announced, the company's performance appears to be largely influenced by organic factors. A share buyback program was not mentioned in recent news.

1.c. Company Highlights

2. Travis Perkins' Half-Year Results: Progress Made, But Challenges Remain

Travis Perkins reported a 2.1% decline in revenue to £2.3 billion, with an adjusted operating profit of £63 million and adjusted earnings per share of 13.3p. While the company has made progress in settling the business, addressing losses in market share, and leveraging Toolstation's growth potential, the results still reflect the challenging market environment. As CEO Geoffrey Drabble noted, "We've made significant progress in embedding Oracle into the organization, which has led to a GBP 75 million cash inflow due to the clearance of invoice matching issues and the ability to collect debt in line with terms."

Publication Date: Aug -07

📋 Highlights
  • Revenue Decline & Profit Resilience:: Revenue fell 2.1% to £2.3 billion, but adjusted operating profit held steady at £63 million.
  • Net Debt Reduction:: Net debt before leases dropped 56% to £103 million, driven by £88 million net cash inflow from operational efficiency.
  • Oracle System Impact:: Resolution of invoice matching issues generated £75 million cash inflow, while net debt fell further by £135 million to £710 million.
  • Overhead Savings & Margin Focus:: Annualized overhead savings from vacancies offset costs, with Toolstation’s gross margin showing sustainable improvement in H2.
  • Merchanting Market Stability:: Like-for-like sales now flat, and targeted promotions helped retain market share, supported by a 20% direct sales focus in merchanting.

Financial Performance

The company's focus on cash generation has led to a net cash inflow of £88 million, with net debt before leases down 56% to £103 million. The Board is recommending an interim dividend of 4.5p per share. However, the adjusted earnings per share of 13.3p fell short of analyst estimates of 0.323.

Operational Improvements

The company has made significant progress in addressing operational challenges, including the resolution of a significant systems issue and the appointment of a new CEO. The merchanting business has shown improvement, with like-for-like sales now flat, and the company is confident in its Oracle system. The company has also invested in its operational capabilities, filling key positions and creating a more customer-centric organization.

Valuation

With a P/E Ratio of -16.36, the market appears to be pricing in a significant amount of uncertainty. The P/B Ratio of 0.64 and P/S Ratio of 0.28 suggest that the company's assets and sales are undervalued. However, the ROIC of 3.43% and ROE of -3.85% indicate that the company still faces significant profitability challenges.

Outlook

The company expects the trading environment to remain challenging, but is focused on enhancing profitability and cash generation from underlying trading operations. With analysts estimating next year's revenue growth at 3.7%, the company will need to continue to make progress on its operational improvements and cost discipline to meet these expectations.

3. NewsRoom

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Estimating The Fair Value Of Travis Perkins plc (LON:TPK)

Dec -01

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Is It Time To Consider Buying Travis Perkins plc (LON:TPK)?

Nov -04

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Kingfisher flies but FTSE 100 loses early gains

Sep -23

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Travis Perkins First Half 2025 Earnings: EPS: UK£0.13 (vs UK£0.074 in 1H 2024)

Aug -08

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BP fuels FTSE 100 but soft US data tempers gains

Aug -05

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Is It Too Late To Consider Buying Travis Perkins plc (LON:TPK)?

May -27

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Travis Perkins Full Year 2024 Earnings: EPS Misses Expectations

Apr -03

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Travis Perkins PLC (TPRKY) (FY 2024) Earnings Call Highlights: Navigating Challenges and ...

Apr -02

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.67%)

6. Segments

Merchanting

Expected Growth: 2.5%

Travis Perkins plc's Merchanting segment growth of 2.5% is driven by increasing demand for building materials from UK's growing construction industry, strategic expansion of branches, and investments in digital capabilities enhancing customer experience. Additionally, the company's focus on providing value-added services and strong supplier relationships contribute to the segment's growth.

Toolstation

Expected Growth: 3.5%

Toolstation's 3.5% growth is driven by its strong online presence, convenient store locations, and wide product range. The brand's focus on trade professionals and competitive pricing strategy also contribute to its growth. Additionally, Travis Perkins' investment in digital capabilities and efficient supply chain management enable Toolstation to maintain a low-cost base, further supporting its growth.

7. Detailed Products

Building Materials

Wide range of building materials including timber, bricks, blocks, and roofing materials

Kitchens

Kitchen design, supply, and installation services including kitchen units, worktops, and appliances

Bathrooms

Bathroom design, supply, and installation services including bathroom suites, tiles, and accessories

Plumbing and Heating

Plumbing and heating materials including pipes, fittings, boilers, and radiators

Tools and Equipment

Wide range of tools and equipment for trade professionals and DIY enthusiasts

Landscaping and Gardening

Landscaping and gardening materials including paving, fencing, and decorative aggregates

Civils, Lintels and Cladding

Civil engineering materials including lintels, cladding, and structural materials

8. Travis Perkins plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Travis Perkins plc is medium due to the availability of alternative products and services in the market. However, the company's strong brand reputation and customer loyalty mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for Travis Perkins plc due to the company's strong market position and the lack of concentration among its customer base.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Travis Perkins plc due to the presence of a few large suppliers in the market. However, the company's long-term relationships with its suppliers and its ability to negotiate prices mitigate this threat to some extent.

Threat Of New Entrants

The threat of new entrants is low for Travis Perkins plc due to the high barriers to entry in the market, including the need for significant capital investment and the complexity of the industry.

Intensity Of Rivalry

The intensity of rivalry is high for Travis Perkins plc due to the presence of several established competitors in the market, leading to a highly competitive environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.77%
Debt Cost 8.68%
Equity Weight 79.23%
Equity Cost 11.23%
WACC 10.70%
Leverage 26.21%

11. Quality Control: Travis Perkins plc passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
ENAV

A-Score: 6.3/10

Value: 4.1

Growth: 5.8

Quality: 4.9

Yield: 8.1

Momentum: 6.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
BELIMO

A-Score: 5.6/10

Value: 0.0

Growth: 5.4

Quality: 8.2

Yield: 5.6

Momentum: 8.5

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Rockwool

A-Score: 4.9/10

Value: 5.6

Growth: 7.0

Quality: 7.2

Yield: 5.0

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Installed Building Products

A-Score: 4.8/10

Value: 2.9

Growth: 9.0

Quality: 5.6

Yield: 2.0

Momentum: 5.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Travis Perkins

A-Score: 3.9/10

Value: 8.2

Growth: 1.3

Quality: 2.6

Yield: 5.0

Momentum: 1.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
NIBE Industrier

A-Score: 2.9/10

Value: 2.6

Growth: 5.0

Quality: 4.1

Yield: 1.9

Momentum: 1.5

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.25$

Current Price

6.25$

Potential

-0.00%

Expected Cash-Flows