Kingfisher’s Third-Quarter Sales Receive a Boost From Energy-Saving Products; Shares Are Cheap

No-moat Kingfisher’s third-quarter trading update provided no reason to alter our GBX 330 fair value estimate. Organic sales for the group were flat year over year, which is somewhat impressive in its own right given that sales are 15% higher than third-quarter 2019, indicating that coronavirus lockdown-induced demand has not fallen off a cliff. No profit figures were provided, but additional investments required, to expand the launch of Screwfix stores in France and wage inflation, led management to slightly lower the top end of its profit-before-tax guidance by GBP 10 million. Shares appear cheap, currently trading at 9.5 times depressed 2023 company-compiled earnings estimates.