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Have I taken leave of my senses to consider FTSE 250 builders’ merchant Travis Perkins (LSE: TPK) after what’s happpened? The company has been under the economic cosh.
At Q3 time in October 2024, new CEO Pete Redfern said it was “clear that the group has allowed itself to become distracted and overly internally focused which has led to the underperformance in recent periods“. Then in February 2025 he stepped down due to ill health.
And then the company delayed its 2024 full-year results because its auditor needed more time. I do hope the new release date of 1 April isn’t a bad omen.
Brighter times ahead?
Despite the gloom, the company stuck with its full-year outlook for operating profit at around £135m. The company also said its “key end markets are stabilising with some very early signs of recovery“. But any “growth will be slow and non-linear at the outset“.
Analysts seem cautiously optimistic, though they’re expecting a lofty 2024 price-to-earnings (P/E) ratio of 30. But if the recovery they’re expecting comes off, that could fall to only around nine by 2026.
The home improvement market still looks tough, and I still see this as risky. In fact, a stronger housing market could have a mixed effect on Travis Perkins. It did well from home improvements during the Covid lockdowns that stopped people moving house.
But I see it as a good candidate to consider for investors who go for recoveries.
Retail restructure
WH Smith (LSE: SMWH) is due to release first-half results on 16 April. And though the name is set to disappear from our high streets, it looks like it could be a good investment to consider in our changing retail landscape.
On 28 March, the company announced the sale of its UK high street business to Modella Capital for an enterprise value of £76m. It will now focus on its travel business, which accounted for 75% of revenue and 85% of trading profit in the past financial year.
The WH Smith brand is not included in the deal. So we’ll still see it at airports, railway stations, and other travel outlets. Those who only know the name from the high street might be surprised that there are more than 1,200 WH Smith travel shops spanning 32 countries.
Better value?
I see this as a good move. Forecasts suggest P/E multiples of 11 dropping to around nine over the next few years. But they’ll need reworking after the latest disposal news.
CEO Carl Cowling said: “As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WHSmith as we become a business exclusively focused on Travel.”
A change in stategy can bring risk. And the mere dumping of high street retail might scare some investors away. But it’s a Stocks and Shares ISA possibility for me.
