LONDON -- The shares of Wolseley (LSE: WOS) slipped 34 pence to 2,828 pence in early trade this morning to remain within striking distance of recording a six-fold return within less than four years.
The early share-price move came after the FTSE 100 member announced its first-quarter results. Wolseley is the world's largest trade distributor of plumbing and heating products, and must surely rank as dullest business within the top-tier index.
Wolseley's shares collapsed to 497 pence during early 2009, but have since rallied strongly as the company raised money, reduced debt and cut costs.
Indeed, October's full-year results showed somewhat healthy progress, with headline earnings jumping 18% and the dividend lifted 33%.
The full-year results also revealed a 350-million-pound special dividend and a balance sheet showing a small net cash position -- both amazing achievements, given the business had to scrap its dividend during the banking crash.
Today's first-quarter numbers showed the positive momentum continuing, with sales up 2% and profits up 8%.
Ian Meakins, Wolseley's chief executive, commented:
Wolseley has continued to generate good growth in the USA and Canada though revenue has declined in Continental Europe as a result of continuing tough market conditions, particularly in the Nordics and France, and unfavorable currency movements.
In the current macroeconomic environment we are working hard to protect gross margins and to drive further operating efficiencies to protect profitability. Cash generation is a key focus and the strength of our balance sheet provides opportunities to invest selectively where we can generate good returns.
Prior to today, City experts were expecting Wolseley's current-year earnings to advance 8% to 182 pence per share and its dividend to climb 13% to 68 pence per share. The projections currently place the shares on a P/E of 15 and yield of 2.4%.
Whether today's first-quarter numbers, the current valuation and that six-fold gain still make Wolseley a "buy" today remains up to you.
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