Wolseley plc (ADR) (OTCMKTS:WOSYY) stock continues to receive mixed ratings on the Street, at the back of no major announcements from the management. The stock has registered an impressive run this year given that it is trading close to its $52 week high of $6.06. The big question now is whether the stock will be able to sustain the impressive run at the back of no major news.
Acquisition Spree
Zack investment Research currently rates the stock as a ‘sell’ having downgraded it from a ‘hold’. Three other brokerage firms currently rate it as a ‘hold’ as a lack of major announcement makes it hard to analyze the company’s growth prospects.
The last major announcement came last year when the Switzerland-based specialist trade distributor confirmed it had received approval to buy Finland-based renowned material distributor Puukeskus. The acquisition was expected to bolster Wolseley revenue stream given that it had £190 million in revenues for the 2013 fiscal year leading to a profit of £4 million.
Wolseley followed the acquisition of Puukeskus with the acquisition of BathEmpire.com a renowned B2C bathroom retail business. For the 2014 fiscal year, the B2C Company had generated revenues of $26 million having followed the same with a great performance in the first quarter.
Earnings
The acquisition of BathEmpire.com provided the Switzerland-based company an opportunity to explore growth opportunities in the rapidly growing bathroom fitting industry in the US. While the company appears to have turned to mergers and acquisition to pursue growth it is still in clear the kind of impact the acquisitions are having on the company’s overall bottom line.
For the six months ended January 31, 2016, Wolseley plc (ADR) (OTCMKTS:WOSYY) says it posted $10.2 million in revenues leading to net earnings of $397.27 million. Gross margins for the period widened from 27.4% to $27.96% thus helping fuel earnings growth. With the stock trading at highs of $5.52 a share, better than expected full year results should help push the stock above its 52-week high.
