Grafton (GB:GFTU)
LSE:GFTU
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Grafton
(LSE:GFTU)
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Rating:68Neutral
Price Target:
1,002.00 p
▲(8.32% Upside)
Action:DowngradedDate:03/07/26
The score is driven primarily by solid underlying financial quality (strong cash conversion and a conservative balance sheet) and supportive valuation (moderate P/E with a ~4% yield). These positives are partly offset by weaker technicals (price below key moving averages and negative MACD) and guidance indicating a slow early-2026 trading environment with persistent cost inflation and regional softness.
Positive Factors
Cash generation & conversion
Sustained high free cash flow conversion and multi-year cash generation underpin durable financial flexibility. This funds organic CapEx, selective M&A, dividends and buybacks, reduces reliance on external funding and allows the group to weather cyclical construction volatility over the medium term.
Negative Factors
Multi-year margin compression
A sustained decline in margins and returns versus prior years signals competitive or cost pressures that may be structural. Lower profitability reduces internal reinvestment capacity and returns to shareholders unless productivity, pricing power or cost base improvements are restored over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation & conversion
Sustained high free cash flow conversion and multi-year cash generation underpin durable financial flexibility. This funds organic CapEx, selective M&A, dividends and buybacks, reduces reliance on external funding and allows the group to weather cyclical construction volatility over the medium term.
Read all positive factors
Grafton (GFTU) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£1.76B
Dividend Yield3.99%
Average Volume (3M)446.66K
Price to Earnings (P/E)13.3
Beta (1Y)0.98
Revenue Growth5.75%
EPS Growth5.86%
CountryUK
Employees10,000
SectorIndustrials
Sector Strength72
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.35
Shares Outstanding190,361,720
10 Day Avg. Volume275,061
30 Day Avg. Volume446,657
Financial Highlights & Ratios
PEG Ratio0.90
Price to Book (P/B)1.10
Price to Sales (P/S)0.72
P/FCF Ratio7.83
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£1,141.67Price Target Upside23.42% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)0.74
Revenue Forecast (FY)£2.62B
Grafton Business Overview & Revenue Model
Company Description
Grafton Group plc engages in the distribution, retailing, and manufacturing businesses in Ireland, the Netherlands, Finland, and the United Kingdom. Its Distribution segment distributes building and plumbing materials to professional trades people...
How the Company Makes Money
Grafton generates revenue primarily through the sale of building materials and related products. Its key revenue streams include the distribution of timber, plumbing and heating supplies, and other construction materials to both trade and retail c...
Grafton Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 27, 2026
Earnings Call Sentiment Positive
The call conveyed a generally positive tone: the group returned to revenue and profit growth, delivered strong free cash flow (88% conversion) and improved return on capital (ROCE 10.9% above WACC), while successfully integrating acquisitions (notably Salvador Escoda) and maintaining disciplined capital returns (dividend increase and new GBP 25m buyback). Material headwinds remain — notably a significant earnings decline in Northern Europe (Finland), subdued volumes in Great Britain, ongoing OpEx inflation and higher finance costs — but management emphasised margin management, tight cost control, balance-sheet strength and a clear capital allocation framework to navigate the cycle. On balance, the positive financial momentum, cash generation and strategic progress outweigh the regional operational challenges.Positive Updates
Revenue and Return to Profit Growth
Revenue increased 10.4% to GBP 2.52bn. Adjusted operating profit including property profit rose 7.1% to GBP 190.2m; adjusted operating profit before property profit was GBP 184.3m, up 6.2%. Adjusted operating margin (pre-property) was 7.3% (30 bps below prior year). Adjusted EPS was 75.4p, up 5.1%.
Negative Updates
Northern Europe Underperformance
Northern Europe revenue declined 1.1% (GBP 469.7m) on a constant currency basis. Adjusted operating profit fell 17.2% (to GBP 29.6m) and operating margin dropped 120 bps to 6.3%. Performance weakness driven by a pronounced decline in Finland (mild weather and temporary internal supply-chain issues) and ongoing overhead pressures in both the Netherlands and Finland.
Read all updates
Q4-2025 Updates
Positive
Negative
Revenue and Return to Profit Growth
Revenue increased 10.4% to GBP 2.52bn. Adjusted operating profit including property profit rose 7.1% to GBP 190.2m; adjusted operating profit before property profit was GBP 184.3m, up 6.2%. Adjusted operating margin (pre-property) was 7.3% (30 bps below prior year). Adjusted EPS was 75.4p, up 5.1%.
Read all positive updates
Company Guidance
Management’s guidance for 2026 flagged a slow start in Great Britain with an expectation of modest market growth in H2, a gradual recovery in the Netherlands during the year, no meaningful improvement in Finland until H2, and strong momentum in Iberia where the construction market is forecast to grow c.3–4% (product segments expected to do well); they reiterated a disciplined capital-allocation framework prioritising organic investment, development CapEx (2025: £41m), M&A (net 2025: £14.3m) and returns to shareholders, announcing a new £25m share buyback and a FY dividend up 2% to 37.75p (dividend cover 2x with an ambition to sit within 2–3x), while targeting to contain OpEx inflation to c.3–3.5% and expect selling-price inflation of roughly 1–1.5% (c.1% Netherlands; 1.5–2% Ireland); the balance sheet remains strong (net debt £123m, lease-adjusted net debt/EBITDA just under 0.4x), adjusted ROCE 10.9% (up 60bps and ~2ppt above WACC), and management pointed to continued cash generation (2025 free cash flow £168m; 88% conversion; >£700m over four years) ahead of a more detailed medium-term update at the 20 May Capital Markets Event.Grafton Financial Statement Overview
Summary
Income Statement
66
Positive
Balance Sheet
74
Positive
Cash Flow
78
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.52B | 2.28B | 2.32B | 2.30B | 2.11B |
| Gross Profit | 383.68M | 845.89M | 374.45M | 868.65M | 830.91M |
| EBITDA | 313.36M | 310.55M | 333.39M | 386.80M | 371.06M |
| Net Income | 136.57M | 122.01M | 148.72M | 208.62M | 206.84M |
Balance Sheet | |||||
| Total Assets | 2.82B | 2.75B | 2.81B | 2.99B | 2.95B |
| Cash, Cash Equivalents and Short-Term Investments | 495.76M | 509.43M | 583.94M | 711.72M | 844.66M |
| Total Debt | 619.15M | 641.10M | 633.20M | 702.80M | 705.63M |
| Total Liabilities | 1.17B | 1.16B | 1.15B | 1.24B | 1.23B |
| Stockholders Equity | 1.65B | 1.60B | 1.66B | 1.75B | 1.72B |
Cash Flow | |||||
| Free Cash Flow | 232.25M | 199.97M | 220.04M | 159.50M | 194.59M |
| Operating Cash Flow | 269.23M | 246.82M | 272.82M | 217.34M | 239.03M |
| Investing Cash Flow | -8.19M | -37.10M | -255.44M | -70.58M | 353.22M |
| Financing Cash Flow | -228.92M | -233.79M | -342.29M | -289.54M | -193.10M |
Grafton Technical Analysis
Positive
925.00
Price Trends
936.50
Negative
932.13
Negative
922.30
Positive
Market Momentum
-10.16
Negative
52.88
Neutral
36.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:GFTU, the sentiment is Positive. The current price of 925 is above the 20-day moving average (MA) of 906.37, below the 50-day MA of 936.50, and above the 200-day MA of 922.30, indicating a neutral trend. The MACD of -10.16 indicates Negative momentum. The RSI at 52.88 is Neutral, neither overbought nor oversold. The STOCH value of 36.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:GFTU.
Grafton Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | £2.76B | 8.02 | 11.47% | 3.58% | -2.44% | -6.43% | |
68 Neutral | £1.76B | 13.32 | 8.38% | 3.99% | 5.75% | 5.86% | |
67 Neutral | £172.99M | 5.60 | 5.64% | 6.70% | 8.83% | 27.20% | |
64 Neutral | £190.95M | 0.64 | 7.92% | 6.53% | ― | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
47 Neutral | £98.68M | -1.82 | -47.73% | ― | -2.08% | -9.83% |
* Industrials Sector Average
GB:GFTU
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925.00
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16.91%
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Grafton Corporate Events
Business Operations and StrategyStock Buyback
Grafton Launches £25m Buyback With First 50,000 Share Purchase
Positive
Mar 6, 2026
Grafton Group plc has begun a £25 million share buyback programme, repurchasing 50,000 ordinary shares of €0.05 each on 5 March 2026 on the London Stock Exchange at a volume‑weighted average price of £9.5664. The shares, acqu...
Business Operations and StrategyStock Buyback
Grafton Group Launches £25m Share Buyback to Cut Share Capital
Positive
Mar 5, 2026
Grafton Group plc has launched a new share buyback programme, appointing Goodbody Stockbrokers UC as agent and Deutsche Bank AG as principal to repurchase ordinary shares worth up to £25 million. The purchases, which will be executed independ...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Grafton Delivers Profit Growth and Cash Returns Despite Tough Construction Markets
Positive
Mar 5, 2026
Grafton Group reported a solid 2025 performance despite weak construction markets in several regions, with revenue up 10.4% to £2.52bn and adjusted operating profit rising 7.1% to £190.2m, helped by the first full-year contribution from ...
Financial DisclosuresRegulatory Filings and ComplianceShareholder Meetings
Grafton Group Releases 2025 Annual Report and Sets Date for 2026 AGM
Neutral
Mar 5, 2026
Grafton Group plc has published its 2025 Annual Report, which is now accessible on the company’s website and via the National Storage Mechanism for regulatory inspection. The Annual Report forms the core disclosure of the group’s recen...
Regulatory Filings and Compliance
Grafton Updates Share Capital and Voting Rights for Disclosure Purposes
Neutral
Feb 27, 2026
Grafton Group plc has confirmed that as of 27 February 2026 it has 191,830,588 ordinary shares of €0.05 each in issue, of which 500,000 are held in treasury, leaving 191,330,588 voting rights in the market. The company stated that this votin...
Regulatory Filings and Compliance
Grafton Updates Market on Total Voting Rights and Share Capital
Neutral
Jan 30, 2026
Grafton Group plc has reported that as of 30 January 2026 it has 191,829,076 ordinary shares of €0.05 in issue, of which 500,000 are held in treasury, leaving a total of 191,329,076 voting rights. The updated share and voting-rights figure p...
Business Operations and StrategyExecutive/Board ChangesFinancial Disclosures
Grafton Holds 2025 Profits in Line as Iberia and Ireland Offset UK and Nordic Weakness
Positive
Jan 13, 2026
Grafton Group reported that trading for 2025 was in line with expectations, with full-year revenue rising 10.4% to £2.52 billion and adjusted operating profit anticipated to meet market forecasts, supported by its diversified portfolio and ti...
Regulatory Filings and Compliance
Grafton Confirms Total Voting Rights at Year-End 2025
Neutral
Dec 31, 2025
Grafton Group plc has confirmed that as of 31 December 2025 it has 191,828,474 ordinary shares of €0.05 each in issue, of which 500,000 are held in treasury and do not carry voting rights, leaving a total of 191,328,474 voting rights. The co...
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.