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Is Bunzl (LSE: BNZL) the best share to buy today? That’s a bold question to ask for any stock, so let’s see if I can answer it.
The international distribution and services group has been on my radar for years. I’ve even called it the FTSE 100’s greatest dark horse on these pages.
Bunzl rarely makes headlines, yet it’s been quietly delivering for decades.
Strong fundamentals
It isn’t a household name and never will be. It specialises in providing essential non-sale items to businesses – think disposable gloves, cleaning supplies, and packaging materials. These are the behind-the-scenes necessities that keep operations running smoothly.
Bunzl is no slow-moving dinosaur though. It has aggressively expanded its global footprint through strategic acquisitions.
In 2024 alone it committed £883m to 13 acquisitions. This aggressive growth strategy has been a key driver of its consistent performance. While acquisitions can be risky, the board now has them down to a fine art.
Bunzl was bombing along as recently as 3 March, when it published full-year 2024 results. These included a solid 3.1% increase in revenue to £11.8bn at constant exchange rates. Adjusted operating profit rose 7.2%, while operating margins expanded from 8% to 8.3%.
The company also announced its 32nd consecutive year of dividend growth, with a total dividend per share increase of 8.2%. This track record underscores Bunzl’s commitment to delivering shareholder value.
Profits shock
But April was the cruellest month as Bunzl issued a profit warning, citing a challenging economic backdrop and weaker-than-expected Q1 performance in North America. Inevitably, Donald Trump’s tariffs have played a part, particularly as they appear to have thrown the economy into reverse.
Margins also slipped in continental Europe (although margin management and cost initiatives should turn this around) as well as in the UK.
The board now anticipates only a “moderate” increase in revenues across 2025, with operating margins expected to slide back to 8%.
Bunzl’s shares plummeted 23.1% in a single day, its worst trading day ever. They’re down 21% over the month, making it April’s worst FTSE 100 performer.
The share price is down 24% over 12 months, although thanks to ear strong growth, it’s still up 37% over five years.
The short term looks bumpy, but I believe Bunzl’s long-term prospects remain compelling. The company’s focus on essential products provides a degree of resilience, even in uncertain economic conditions.
The recent share price decline has brought Bunzl’s valuation to more attractive levels. With a price-to-earnings ratio just under 12 and a dividend yield exceeding 3%, the stock appears more accessible to investors.
Buying opportunity?
The share price slump does present an interesting opportunity to consider. The company’s consistent track record, strategic growth initiatives, strong balance sheet and essential product offerings all tempt.
If the UK struck a trade deal with Trump, that could give the stock an instant lift, but we have no idea whether that’s going to happen. Also, I’ve learned from hard experience the danger of buying straight after a profit warning. More can follow.
As a long-term fan, I think this could well be one of the best FTSE 100 shares to buy today. But only for investors who take a long-term view. The short-term looks bumpy to me but I feel Bunzl is worth considering.
