GENUIT (GEN)– Industrials
| Price: 313p -12% | P/E: 17.5x |
| Market Cap: £880m | Yield: 3.6% |
To start with, today’s trading update from plumbing and pipe group Genuit came across as upbeat with revenue for the four months to end-October up some 7% on a headline basis and 3.7% on a like-for-like basis ‘demonstrating resilience and market share gains in a subdued market’.
In the next breath, however, the firm lowered its full-year operating profit forecast from a range of £95-99 million to £92-95 million reflecting ‘a moderation in market volumes’ since the first-half results in August.
The slowdown has been caused by ‘purchasing uncertainty relating to the November UK Government Budget and current UK economic outlook’, although the firm is expecting operating margins to increase in H2 due to price rises, productivity gains and other cost efficiencies.
Our View
It’s a shame the market has taken today’s update badly as Genuit is a well-run business, but even the best companies can’t control the economy or influence buying intentions when there is so much uncertainty around.
At this price the shares are back to the lows of the panic market sell-off in April, and technically they look oversold, but it might take a while for them get back on an even keel and we doubt that will be before the Budget.
Read the full press release here: https://www.genuitgroup.com/investors/
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