Shares in Wolseley (LSE: WOS) slumped in early trading today despite announcing improved figures for the half year ended 31 January 2016.

The FTSE 100 listed plumbing and heating group revealed a 5.9% rise in on-going revenue to £6.8bn, and a 5.1% increase in trading profits to £410m. Earnings per share rose by 6.4% to 110.2p.

Chief Executive Ian Meakins remained confident about the future:

“Our strong cash flow has allowed us to continue to invest in our business for future growth, as well as to return surplus cash to our shareholders,” he said.

City Analysts predict an 8% rise in earnings to 247.98p per share this year, followed by a 12% rise to 276.46p per share for the year ending 31 July 2017.

Dividends are forecast at 99.15p for the current year and 109.28 next year, offering a prospective yield of 2.6% for fiscal 2016 and 2.8% for 2017. The shares go ex-dividend on March 31, with the interim payment of 33.28p payable on April 29.

Wolseley currently trades on 16 times forecast earnings for the current year, falling to 14 in the year ending 31 July 2017.

The shares seem fairly priced to me, and I do not see any compelling reason to buy.


In contrast, shares in Bellway (LSE: BWY) rallied today as it announced interim results for the six months to the end of January, revealing a rise in pre-tax profits and revenue.

Profits rose 42.6% to £226.6m, whilst revenue rose by 30.5% to £1.08bn. Earnings per share increased from 103.5p to 148.7p compared to the previous year.

Chairman John Watson remarked:

“Bellway’s strategy for growth is helping to deliver much needed new homes, whilst delivering sustainable returns for shareholders.”

Consensus forecasts suggest a 26% rise in earnings to 285.11p per share this year, followed by a 9% rise to 311.82p for the year ending 31 July 2017.

Dividends are forecast at 93.44p per share for this year, rising to 102.99p in 2017, offering prospective yields of 3.8% and 4.2% for the next two years.

Bellway shares currently trade on 8.7 times forecast earnings, falling to 7.9 for fiscal 2017.

At current levels I think Bellway’s shares offer excellent value, given the low P/E ratio.


Thomas Cook Group (LSE: TCG) meanwhile saw its shares fall sharply as part of a wider sell-off of travel & leisure stocks as Brussels was hit by explosions.

The FTSE 250 listed tour operator also issued a trading update this morning which cautioned that summer bookings will be below last year’s levels following the attacks in Egypt and Turkey.

However, analysts are predicting a 20% rise in earnings to 10.71p per share this year, followed by a 23% increase in fiscal 2017.

Dividends are forecast at 2.10p and 3.06p for the next two years, offering a prospective yield of 2.2% for 2016 and 3.2% for 2017.

Thomas Cook currently trades on 8.6 times forecast earnings for the current year, falling to 7 for the year ending 30 September 2017.

The shares look undervalued to me, and would seem to offer excellent upside potential given the low P/E ratio and growth outlook.

Time to Buy?

I think that investors interested in growth might want look at Bellway and Thomas Cook in more detail, but should avoid Wolseley for the time being.

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Bilaal Mohamed has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.