Kingfisher’s First Quarter Is Tracking in Line With Expectations; Shares Are Undervalued

No-moat Kingfisher reported a 6% decline in revenue during the first quarter against a strong comparable base period, where demand for home improvement was driven by coronavirus-related lockdowns. Sequential revenue improvement of 14.5% compared with the previous quarter highlights the company’s strong comparatives in the prior year. Full-year guidance has been reiterated and we maintain our GBX 353 fair value estimate. We view shares as undervalued, which are currently trading at a price/earnings ratio of 9 times on company-compiled consensus estimates. Management are taking advantage of the discounted share price to repurchase a further GBP 300 million shares, having already bought back GBP 145 million in the first quarter.