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Bunzl (BZLFY)
OTHER OTC:BZLFY
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Bunzl
(OTC:BZLFY)
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Rating:65Neutral
Price Target:
$15.50
▲(9.54% Upside)
Action:ReiteratedDate:03/05/26
The score is driven primarily by solid underlying financial durability (steady margins, strong cash conversion) but held back by stalled growth and 2025 profit pressure. The earnings call adds a modestly cautious tilt due to execution challenges and slightly lower margin outlook despite recovery actions. Valuation/dividend are supportive, while technical signals are broadly neutral.
Positive Factors
Strong cash generation / conversion
FCF that closely mirrors reported earnings demonstrates high earnings quality and predictable cash conversion. This reliable cash flow funds dividends, buybacks and bolt-on M&A, provides resilience against cyclical drops in revenue and supports reinvestment in efficiency programs.
Diversified distribution and digital penetration
A broad geographic footprint across sectors, rising own-brand share and 76% digital ordering underpin sticky customer relationships, better margins and lower cost-to-serve. High digital penetration and national Q4 wins (>USD100m) support sustainable market position and recurring revenues.
M&A and operational efficiency programs
Active bolt-on acquisitions plus faster-than-expected Nisbets synergies show the group can scale and extract value from deals. Large warehouse consolidations and procurement initiatives create durable cost saves and structural margin improvement potential over the medium term.
Negative Factors
Stalled organic revenue growth
Persistent flat or negative organic revenue reduces operating leverage for a distributor whose model depends on scale. With several years of muted underlying growth, the company is more reliant on acquisitions and price recovery to drive durable top-line and profit expansion.
North America execution and margin pressure
Execution breakdowns from a sales-and-operations change reduced local responsiveness, causing wallet-share loss and margin erosion in Bunzl's largest market. Structural fixes may take multiple quarters; sustained underperformance there meaningfully weakens group profitability.
Elevated leverage / limited financial flexibility
For a low-margin distributor, leverage at the 1.0–1.4 D/E range and adjusted net debt/EBITDA near ~2.0x constrains flexibility to absorb slower cash flow or larger acquisition-led integration risks. Recent working-capital increases and a 2025 FCF decline amplify the constraint.
Bunzl (BZLFY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.63B
Dividend Yield3.4%
Average Volume (3M)43.82K
Price to Earnings (P/E)15.0
Beta (1Y)0.59
Revenue Growth4.74%
EPS Growth3.33%
CountryUS
Employees26,978
SectorConsumer Defensive
Sector Strength42
IndustryFood Distribution
Share Statistics
EPS (TTM)0.67
Shares Outstanding648,422,850
10 Day Avg. Volume0
30 Day Avg. Volume43,824
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)2.42
Price to Sales (P/S)0.58
P/FCF Ratio9.01
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue0.81
Enterprise Value/Gross Profit2.86
Enterprise Value/Ebitda8.09
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.19
Revenue Forecast (FY)$16.07B
Bunzl Business Overview & Revenue Model
Company DescriptionBunzl PLC is a multinational distribution and outsourcing company headquartered in London, UK, specializing in providing a wide range of products and services to various sectors including foodservice, grocery, healthcare, cleaning and hygiene, and safety. The company offers an extensive portfolio of disposable and durable products, such as packaging materials, cleaning supplies, and personal protective equipment. Bunzl operates through a network of subsidiaries across North America, Europe, and other regions, allowing it to serve a diverse customer base efficiently.
How the Company Makes MoneyBunzl generates revenue primarily through the distribution of a variety of products to its customers in different sectors. The company's revenue model is largely based on selling goods at a margin over the cost of procurement, which includes purchasing products from manufacturers and selling them to end-users. Key revenue streams include sales of packaging solutions, disposable products, and safety equipment. Bunzl also benefits from long-term contracts with major clients, which provides a stable income base. Additionally, the company's ability to leverage economies of scale and its extensive supplier relationships enable it to maintain competitive pricing and improve profit margins. Strategic partnerships with suppliers and customers further enhance its market presence and operational efficiency, contributing to its overall earnings.
Bunzl Earnings Call Summary
Earnings Call Date:Mar 02, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Sep 01, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: management acknowledged a challenging 2025 with execution issues (notably in North America distribution), margin and profit declines, and difficult end-market conditions, while highlighting a strong cash generation, successful corrective actions that moderated margin declines in H2, Q4 new business wins (>USD 100m), improving underlying revenue momentum, operational efficiencies, and meaningful progress on own brand and Nisbets synergies. Given the balance of significant operational challenges and clear evidence of recovery actions and financial resilience, the tone is cautiously constructive but not fully recovered.Q4-2025 Updates
Positive Updates
Revenue Growth and Underlying Momentum
Group revenue increased 3.0% at constant exchange rates in 2025, with underlying revenue growth of 0.4% for the year and improvement during the year to 0.9% in H2 (vs 0.2% in H1). New business wins in Q4 contributed to the H2 acceleration.
Strong Cash Generation and Capital Returns
Generated GBP 579 million of free cash flow (cash conversion 95%). Completed a GBP 200 million share buyback in October and returned almost GBP 450 million to shareholders (dividends + buybacks). Adjusted net debt-to-EBITDA around 2.0x, within target leverage range.
Moderation of Margin Decline and Operational Recovery in H2
Adjusted operating margin declined to 7.6% (from 8.3% in 2024), but margin decline moderated in H2 (H1 down 0.9pp year-on-year; H2 down 0.4pp). Actions taken (leadership changes, cost management, restoring local decision-making) drove improved execution and service levels.
Commercial Wins and Own Brand Progress
Established more than USD 100 million of new business in Q4 (national grocery and foodservice customers). Own brand penetration increased to 30% group-wide (up ~2pp year-on-year, +1pp in Continental Europe) and digital order penetration reached 76%.
Acquisitions, Synergies and Strategic Expansion
Completed 8 acquisitions (GBP 132 million spend) including first healthcare entry in Chile and physical presence established in Slovakia. Nisbets integration delivered better-than-expected synergies and strong H2 profit performance; bolt-on M&A pipeline remains active.
Operational Efficiency Programs
Completed 36 warehouse consolidations/relocations (vs 19 prior year) and implemented procurement and demand-planning initiatives; Europe saw 10 warehouse consolidations in 2025 (major program in France reducing warehouses from 15 to 6) expected to deliver net benefits in 2026.
Employee Engagement and Strategic Confidence
Maintained a 71% Trust Index score (Great Place to Work). Management reiterated 2026 guidance (moderate revenue growth and more stable adjusted operating profit) and emphasized medium-term confidence in the Bunzl model and consolidation opportunities.
Negative Updates
Adjusted Operating Profit and Margin Decline
Adjusted operating profit fell to GBP 910 million, a decline of 4.3% year-on-year (or around GBP 902 million excluding an GBP 8 million share-based payment credit). Operating margin fell to 7.6% from 8.3% in 2024 (approx -0.7pp).
North America Distribution Execution Issues and Margin Pressure
North America adjusted operating profit decreased 11.5% to GBP 441 million and operating margin declined to 7.0% (from 7.9%). Execution problems following the sales-and-operations model change reduced local agility, caused wallet-share loss and amplified by weakening end markets and tariff-related supply disruption.
Challenging End-Market Conditions (Foodservice, Processors, Brazil)
Weak consumer confidence in the U.S. (14-year low) and inflationary pressures reduced restaurant and convenience store footfall; food processor sector faced cattle supply/demand issues. Brazil faced difficulty passing on currency-driven product cost increases and weakening industrial demand, hurting margins.
Earnings Per Share and Profitability Metrics Weakness
Adjusted earnings per share fell 5.2% to 179.3p. Return on invested capital was 13% (impacted by profit decline) and return on average operating capital was 37%, reflecting uneven profit performance across the portfolio.
Free Cash Flow and Working Capital Headwinds
Free cash flow declined by 9% year-on-year to GBP 579 million. Working capital increased by GBP 78 million mainly due to reduction in payables related to share buyback payments, partially pressuring near-term cash position.
One-off and Portfolio Adjustments
Took an impairment of GBP 11 million on a pandemic-era acquisition with weaker post-COVID trading. Acquisition spend was lower (GBP 132 million vs record spend in 2024) reflecting macro uncertainty; disposals (eg R3 Safety) reduced revenue mix and had a 0.4pp headwind to growth.
Cost and Price Pressures
Underlying gross margin declined and operating cost to sales ratio increased to 21.1% from 20.5% (driven partly by acquisitions). Certain clean & hygiene businesses (France, UK) experienced selling-price deflation despite historical product cost inflation, while tariff-driven price changes created mixed effects.
Company Guidance
Management reiterated 2026 guidance expecting moderate revenue growth driven by slight volume growth and a small benefit from announced acquisitions, with selling prices broadly neutral and operating cost inflation around 2–3% (partially offset by cost/sourcing initiatives including annualising Nisbets synergies); they expect operating margin to be slightly down year‑on‑year versus 2025’s 7.6% (excluding an £8m share‑based payment credit), a more stable adjusted operating profit with a more normal H1/H2 weighting, a net finance charge of c.£125m, an effective tax rate of 26% and continued leverage within the target range (adjusted net debt/EBITDA c.2.0x, target 2–2.5x), with 2026 providing the foundation for future organic profit growth.Bunzl Financial Statement Overview
Summary
Durable profitability and strong cash conversion support the score (FCF consistently close to net income), and leverage improved in 2025 as debt fell. Offsetting this, revenue has been flat-to-down and 2025 saw weaker earnings/FCF, indicating near-term operating pressure.Income Statement
Profitability is steady for a distributor, with net margins generally in the ~3.9%–4.5% range (2020–2025) and EBIT/EBITDA margins holding in the mid-single to ~10% area. However, growth has stalled: revenue has been flat-to-down for several years and declined in 2025 (annual report shows -2.0% revenue growth). Earnings also softened in 2025 versus 2024, pointing to some near-term pressure despite still-resilient margins. (Note: 2025 gross profit and gross margin are shown as 0, so gross-level trend for that year cannot be assessed.)66
Positive
Balance Sheet
Leverage is meaningful but manageable: debt-to-equity sits around ~1.0–1.4 across 2020–2025, improving in 2025 versus 2024 as total debt declines. Returns on equity remain solid (mid-to-high teens, peaking above 20% earlier in the period), supporting the view that the capital structure is productive. The key risk is that leverage is still elevated for a low-margin business, leaving less flexibility if operating conditions weaken.60
Neutral
Cash Flow
Cash generation is a clear strength: free cash flow consistently tracks close to net income (roughly ~0.91–0.96x across the period), indicating good earnings quality and conversion. Operating cash flow and free cash flow are positive each year, though free cash flow growth is choppy and turned down in 2025 (down ~9.1% after modest growth in 2024). Overall cash flow looks reliable, but the recent decline suggests monitoring working-capital and demand trends.71
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 11.82B | 11.59B | 11.78B | 11.80B | 12.04B | 10.29B |
| Gross Profit | 3.34B | 0.00 | 3.39B | 3.19B | 3.02B | 2.52B |
| EBITDA | 1.18B | 1.12B | 1.23B | 1.18B | 1.04B | 910.20M |
| Net Income | 483.60M | 449.14M | 500.40M | 526.20M | 474.40M | 442.80M |
Balance Sheet | ||||||
| Total Assets | 8.27B | 8.56B | 9.53B | 8.75B | 8.67B | 7.11B |
| Cash, Cash Equivalents and Short-Term Investments | 481.00M | 539.15M | 1.43B | 1.43B | 1.50B | 776.90M |
| Total Debt | 2.80B | 2.89B | 3.72B | 3.09B | 3.13B | 2.59B |
| Total Liabilities | 5.72B | 5.77B | 6.74B | 5.78B | 5.95B | 4.91B |
| Stockholders Equity | 2.55B | 2.78B | 2.79B | 2.97B | 2.72B | 2.20B |
Cash Flow | ||||||
| Free Cash Flow | 823.10M | 748.33M | 856.50M | 845.70M | 904.90M | 700.40M |
| Operating Cash Flow | 886.90M | 818.27M | 910.90M | 904.00M | 951.60M | 733.10M |
| Investing Cash Flow | -218.10M | -166.57M | -609.10M | -339.50M | -223.20M | -458.00M |
| Financing Cash Flow | -654.80M | -757.62M | -381.10M | -666.90M | -331.00M | -458.70M |
Bunzl Technical Analysis
Positive
14.15
Price Trends
14.21
Positive
14.52
Positive
15.16
Negative
Market Momentum
0.15
Negative
58.75
Neutral
63.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BZLFY, the sentiment is Positive. The current price of 14.15 is below the 20-day moving average (MA) of 14.58, below the 50-day MA of 14.21, and below the 200-day MA of 15.16, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 58.75 is Neutral, neither overbought nor oversold. The STOCH value of 63.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for BZLFY.
Bunzl Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $20.32B | 25.64 | 15.30% | ― | 4.80% | 3.49% | |
69 Neutral | $2.57B | 34.00 | 12.67% | ― | 8.88% | 54.12% | |
65 Neutral | $9.63B | 15.02 | 17.69% | 3.40% | 4.74% | 3.33% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
62 Neutral | $41.08B | 22.87 | 83.64% | 2.84% | 2.92% | -4.06% | |
57 Neutral | $14.15B | 57.89 | 7.75% | ― | 10.55% | -23.38% | |
52 Neutral | $2.31B | -142.83 | -6.37% | ― | 1.45% | -5.49% |
* Consumer Defensive Sector Average
BZLFY
Bunzl
14.88
-4.01
-21.22%
SYY
Sysco
85.78
12.74
17.44%
CHEF
The Chefs' Warehouse
63.22
4.22
7.15%
UNFI
United Natural Foods
37.83
10.45
38.17%
PFGC
Performance Food Group
90.04
11.33
14.39%
USFD
US Foods Holding
92.15
25.34
37.93%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.