Inflation Drives Revenue Growth for Bunzl in the First Quarter

Narrow-moat Bunzl’s brief trading statement perfectly illustrated the resilience of the company’s business model, with organic growth coming in at 11% for the first quarter of the year, with most of this growth coming in the form of pass-through inflation. Bunzl’s two largest single markets, North America and the U.K., which together account for more than 70% of revenue, are currently experiencing the highest inflation rates in the developed world, putting Bunzl’s operations in the eye of the storm. The company has managed to effectively pass through these increased costs and this should be music to investors’ ears. We do not expect to make any immediate changes to our forecasts on the back of this update, nor to our GBX 2,600 fair value estimate. With the share price having run heavily over the last two months we now view shares as moderately overvalued.