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:
Road 2025 to 2032 new year direction concept

Image source: Getty Images

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.

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

US Tariffs street sign
Investing Articles

2 FTSE 100 shares to consider as tariff threats explode!

Are you looking for lifeboats as global trade wars intensify? Royston Wild thinks these FTSE 100 safe haven shares demand…

Read more »

US Tariffs street sign
Growth Shares

2 UK growth stocks exposed to escalating US trade tensions

Jon Smith reviews the latest tariff news impacting UK companies and flags up a couple of growth stocks that could…

Read more »

Abstract bull climbing indicators on stock chart
US Stock

This good news could help to fuel a long-term Amazon share price rally

Jon Smith points out a new deal struck regarding copper and talks through the broader positive implications it could have…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Down 22% to under £11, is this high-tech FTSE high-flyer a screaming bargain now?

Despite solid growth, strong margins, and rising cash generation, this FTSE tech star has dropped sharply. So is it seriously…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

Here’s how investors could aim for £9,532 in yearly dividend income from this 9.9%-yielding FTSE 250 high-yield gem

A near double-digit yield backed by growing cash flow and long-term contracts makes Energean look like one of the FTSE…

Read more »

Middle-aged white man wearing glasses, staring into space over the top of his laptop in a coffee shop
Investing Articles

At a bargain-basement valuation under £19, is it time for me to buy this FTSE 100 banking gem?

This FTSE 100 giant has reshaped its business and its balance sheet and is growing fast. With the shares still…

Read more »

Businessman hand stacking money coins with virtual percentage icons
Investing Articles

How to target a growing second income by investing in dividend shares

A portfolio of dividend shares can be a great source of extra income. But it’s best when that income stream…

Read more »

Emma Raducanu for Vodafone billboard animation at Piccadilly Circus, London
Investing Articles

Up almost 50%! Is it too late to buy Vodafone shares?

Vodafone shares are back on the rise after years of decline, but can this rally continue into 2026? Zaven Boyrazian…

Read more »