My favourite FTSE value stock falls another 6% on today’s results – should I buy more?

Harvey Jones highlights a FTSE 100 value stock that he used to consider boring, but has been surprisingly volatile lately. It may reward patient investors.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Road 2025 to 2032 new year direction concept

Image source: Getty Images

My favourite FTSE 100 value stock used to be one of the most boring. I saw that as a virtue. It grew steadily, lifted dividends year after year, and over time the total return compounded into something special.

Its name? International distribution group Bunzl (LSE: BNZL). I saw it as the classic unsung hero, rolling up its sleeves and quietly getting on with the unglamorous task of building a business and creating long-term wealth for investors.

Bunzl sells everyday items businesses can’t do without, from cleaning products to disposable coffee cups and rubber gloves. Like I said, it’s dull. But there was nothing dull about its aggressive acquisition strategy, snapping up rivals around the world and bolting them on to boost profits.

Bunzl share price struggles

I wasn’t alone in admiring Bunzl’s discreet charm. Back in 2018, investment platform AJ Bell highlighted it as a FTSE 100 dividend hero, delivering a total return of 339% over a decade.

It has an exceptional dividend record too, lifting payouts every year for more than three decades. Over the last five years, they’ve climbed at an impressive annual average rate of 7.48%.

Then suddenly Bunzl stopped being boring, and not in a good way. On 16 April, the shares crashed 25% after a shock profit warning, alongside the suspension of its share buyback. Sales were hit by US tariffs and the loss of a major customer.

I’ve learned the hard way about rushing in after profit warnings. Shares may look cheaper, but after-shocks are common, as I discovered with Diageo and JD Sports Fashion.

So I held back, and that proved sensible. The shares are now down 38% over the last 12 months, with no signs of a recovery yet. I’ve taken my time and bought Bunzl on three separate dips. Today, the stock has dipped again.

FTSE 100 struggler

This morning, Bunzl said full-year revenues are expected to grow by 2% to 3% at constant exchange rates, in line with guidance. That hardly sounds disastrous, yet the shares promptly slumped another 6.5%, even as the FTSE 100 jumped 1.3%.

Markets have doubtless recoiled at the news that margins are set to slip to 7.6% across 2025, down from 8.3% in 2024, although the rate of decline should ease in the second half. The board said momentum could also improve in the final quarter, helped by performance initiatives and new business wins in North America. Growth in 2026 looks modest, though. In other words, a bit boring.

And that’s fine by me. Recovery stories take time, which is why I’ve been building my position gradually. The US market remains fragile and the global backdrop isn’t exactly buoyant. Any further missteps could send the shares lower still.

Bunzl looks great value on a price-to-earnings ratio of 11.43, and a solid trailing yield of 3.43%. Bargain hunters have already emerged. The shares have clawed back some of today’s losses and are now down just 2.88%.

I still think they’re worth considering, provided investors take a long-term view. That’s always the case with battered recovery plays like this one. Bunzl should bounce back, given time. Investors need a high boredom threshold though.

Harvey Jones has positions in Bunzl Plc, Diageo Plc, and JD Sports Fashion. The Motley Fool UK has recommended Aj Bell Plc, Bunzl Plc, and Diageo Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Front view of aircraft in flight.
Investing Articles

Is it game over for the BP share price rally?

The BP share price has looked like a one-way bet in recent weeks as oil and gas prices soar but…

Read more »

Man hanging in the balance over a log at seaside in Scotland
Investing Articles

Amid geopolitical and AI risks, here’s how I’m positioning my ISA and SIPP in 2026

Edward Sheldon explains how he's allocating capital within his investment accounts and SIPP amid the various risks to the market.

Read more »

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

My game plan for the next stock market crash

Markets have been surprisingly resilient during the recent Middle East conflict but we still cannot rule out a stock market…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

1 top growth stock to consider buying after it crashed 59%

This S&P 500 growth stock has fallen off a cliff lately due to AI software fears. Our writer thinks this…

Read more »

A mature woman help a senior woman out of a car as she takes her to the shops.
Investing Articles

Here’s how a 35-year-old putting £15 a day into an ISA could end up earning £18k+ of passive income annually!

A 35-year-old with no ISA but a willingness to invest relatively small sums could one day be earning many thousands…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

With the potential to double in 10 years, this could be a dividend stock to consider buying

With a yield of 7.2%, income investors might consider buying this stock. But reinvesting the dividends could deliver even more…

Read more »

Happy couple showing relief at news
Investing Articles

How much would someone need to invest in the stock market to target a £1,250 monthly second income?

Investing in the stock market can help deliver long-term wealth. But James Beard says it can also be a way…

Read more »

happy senior couple using a laptop in their living room to look at their financial budgets
Investing Articles

How much would someone need in an ISA to aim to treble the current State Pension?

Experts say the State Pension isn’t generous enough to provide a comfortable retirement. James Beard says the stock market could…

Read more »