UK support services share Bunzl (LSE: BNZL) emerged as one of the FTSE 100’s strongest risers on Thursday.
At £24 per share the Bunzl share price ended the day close to 1% higher than Wednesday’s close. It had reached two-month highs earlier in the session and is now 15% higher than it was a year ago.
Bunzl’s share price climbed following the release of fresh financials. Is now the time for me to buy more of the FTSE 100 stock?
Revenues rise at Bunzl
In commentary for the six months to June, Bunzl said that it “has delivered good overall growth against continuing pandemic-related challenges.” Revenues are expected to have ticked 1% higher during the period at actual exchange rates, or by 6% to 7% on a constant currencies basis.
Bunzl said that “at constant exchange rates, underlying revenue growth is expected to reflect a strong recovery in the base business, including the foodservice and retail sectors, largely offset by the anticipated decline in larger Covid-19-related orders”. Revenues on this basis are also expected to be up 6% versus the same 2019 period. Adjusted operating margins are tipped to be 1% higher meanwhile.
Bunzl kept its revenues guidance unchanged, and it expects underlying turnover at constant exchange rates to be “moderately higher” in 2021 compared with 2019. However, the FTSE 100 firm hiked its adjusted operating margin predictions and reckons these will be slightly above historical levels.
Acquisitions keep on coming
In other news Bunzl said that it had sealed two acquisitions at the back end of May. One of these, Comax, supplies cleaning and hygiene products — as well as catering and kitchen supplies — to the leisure, janitorial, care home and foodservice sectors in Britain.
Harvey Distributors, meanwhile, is a cleaning and hygiene distributor in Australia which services the healthcare, education, foodservice and facilities management sectors. Bunzl has now made six acquisitions since the beginning of 2021.
“Both businesses strengthen the group’s cleaning & hygiene operations, an area we expect will be supported by enhanced hygiene trends,” commented chief executive Frank van Zanten. He added that “the pipeline for acquisitions remains active, with discussions ongoing.”
Why I bought this FTSE 100 share
I actually own Bunzl shares in my Stocks and Shares ISA. I bought the blue-chip because the broad range of essential products and services it supplies to multiple sectors across the globe makes it one of the best ‘stress-free’ stocks out there. There’s a reason why the FTSE 100 firm has raised annual dividends for 28 years on the spin; it can expect to increase earnings whatever economic, political or social crisis is raging outside our windows.
I’m also pleased to see that Bunzl’s strong appetite for profits-boosting M&A isn’t running out of steam, either. It’s true that an acquisition-led growth strategy adds an extra layer of risk. Unexpected costs can emerge and earnings from newly-purchased assets can disappoint. But I’m encouraged by the company’s terrific track record on this front. I’d buy more of this UK share for my ISA.
