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Two UK shares on my watchlist suffered a punishment beating at the hands of disappointed investors last week. So is this a brilliant opportunity for far-sighted investors to consider buying these FTSE 100 stocks?
The first is business intelligence, academic publishing and events specialist Informa Group (LSE: INF), whose shares slumped 9.7% last week.
This follows a stretch of modest performance, with the stock up just 3.7% over the past 12 months. It has climbed 30% over five years though, so isn’t exactly a basket case.
Have Informa shares been harshly treated?
Historically, Informa has traded at a premium, but the recent downturn has brought its price-to-earnings (P/E) ratio to 15.3, which is tempting.
Full-year 2024 results, published on Thursday (6 March), triggered the recent sell-off. They weren’t all bad news though.
Revenues climbed 11.4% to £3.55bn, while adjusted operating profit jumped 16.5% to £995m. Free cash flow surged 28.6% to £812.1m. What’s not to like?
In this case, it was a disappointing outlook. The board predicts underlying revenue growth will slow to just 5% in 2025. A wider concern is that if global economy struggles, as Donald Trump’s tariffs bite, the events industry could see attendance and sponsorship revenues decline.
On the plus side, a joint venture with the Dubai World Trade Centre should open up new lines of revenue in the Middle East.
The stock only yields 2.6% but the board hiked the dividend by 11.1% last week. It paid £425m share buybacks in 2024 too. The total cash return is to £675m. I think the market was a bit too tough on Informa last week.
Time to consider Bunzl shares?
Distribution group Bunzl (LSE: BNZL) has been on my watchlist for yonks. It’s the FTSE 100’s perennial dark horse and a solid long-term performer, until recently.
The Bunzl share price fell 8.7% last week, and it’s flat over 12 months. Although over five years, it’s up 60%.
That’s similar to Informa and here’s something else they have in common. Bunzl also released a poorly received set of full-year results last week, on Monday 3 March.
Adjusted operating profit rose a healthy 7.2% at constant exchange rates to £976m, but statutory operating profit edged up just 1.3% to £799m.
Revenues rose just 0.2% on a reported basis to £11.8bn. They’ve now idled for the second year in a row, as deflation squeezes prices amid tough competition.
Bunzl’s successful strategy of growth through acquisitions shines undimmed, but it needs to, amid signs of a slowdown in its core operations. The trailing yield is 2.4%. However, the board did lift the full-year dividend by a healthy 8.2%. That’s extended its track record of annual dividend growth to an impressive 32 consecutive years.
I think both Informa and Bunzl are well worth considering with a long-term view. But I think the next year or two could remain sticky, amid global uncertainty. I like both, but wouldn’t go as far as calling them unmissable buys.
