Kingfisher shares: Price analysis before buying or selling

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ISIN code: GB0033195214

Ticker: LON: KGF

Index or market: FTSE 100

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Elements to consider before selling or buying Kingfisher shares

Analysis N°1

First, the geographical development of the group's brands will be monitored on an international level with the opening of new stores and the renovation of old points of sale.

Analysis N°2

We will also keep a close eye on Kingfisher's acquisitions abroad, particularly the acquisitions of chain stores, which could enable it to improve its profitability and establish itself in new geographical areas.

Analysis N°3

The diversification of the group's activities is also important because it represents an opportunity for new sources of income. It is therefore essential to monitor Kingfisher's news and any announcements to that effect.

Analysis N°4

The group's quarterly or annual financial results are of course an important part of your fundamental analysis of Kingfisher.

Analysis N°5

Finally, we will keep an eye on the competition in this sector of activity and on the evolution of the market shares of each of its major players as well as their most influential publications.

Analysis before buying or selling Kingfisher shares

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General presentation of Kingfisher

Kingfisher is a British company specialized in the sale and distribution of home improvement items. It is the leader in this particular sector of activity in Europe and the company also ranks as second in the world in this field.

The products offered by this company are sold through numerous stores located in several countries and distributed as follows:

In the United Kingdom and Ireland, Kingfisher has 1994 stores, which makes it number one in this sector of activity in both countries. It also counts with 812 retailers under the name of B & Q and Screwfix in this area.
In France, the group counts with 221 stores, 119 stores under the name of Brico Depot and 102 stores under the name of Castorama. It is also the leader in this sector of activity on the French territory.
In Poland, the company owns 75 stores exclusively under the name Castorama and is also the leader in this sector of activity.
In Spain, it has 28 stores under the name of Brico Depot, Kingfisher is number 2 in this sector.
In Russia, Kingfisher owns 21 stores under the name of Castorama and is number 3 in this market
In Germany, it owns 19 stores under the name of Screwfix
In Romania, Kingfisher owns 15 stores under the name of Brico Depot
Finally, in Portugal, there are 3 stores under the name of Brico Depot owned by this group.

It is therefore in the United Kingdom and Ireland that the group Kingfisher generates most of its turnover with 44.4% of its total turnover. Then comes France with 37.9% of its turnover, then Poland with 10.6% of its turnover, the rest is generated in other countries which we mentioned before.

Photo credits: ©piotrkt/123RF.COM

The major competitors of Kingfisher

Even if the sector of home improvement and of the distribution of items in this field is not very competitive in Europe, Kingfisher is not the only group trying to build itself a reputation in this sector of activity, the group faces competition by a few other companies that you should know about.

Adeo

Kingfisher is in fact number two in the world in this sector of activity and its main competitor has always been the group Adeo which owns the brands

Other competitors

Of course, there are also other companies that are less important, but which still represent a competition to the giant Kingfisher with among others, Mr. Bricolage and Bricomarche each one holding 10% of the market shares as well as other even smaller competitors such as Bricorama and Brico Leclerc.

The major partners of Kingfisher

In order to become the key player in the sector of home improvement and of the distribution of construction items, that it is today, the giant Kingfisher had to put in place very specific development strategies that are based on certain strategic alliances. Therefore, we invite you to find out some examples of these association to other companies to understand better the impact that such associations could have on the course of this asset.

Atos

In 2011, Kingfisher moved closer to the outsourcing company Atos, as part of an extended partnership. The contract, was signed for a period of 4 years then, in it, Atos engaged to take care of the computer park services of the company as well as of the operating supervision, technical administration and the development of software for the company in Europe. In total, there are more than 286 stores in France, Spain, Poland and Russia that are affected by this agreement.

Mr Bricolage

In 2014, Kingfisher also started negotiations with one of its main competitors Mr Bricolage, to bring the two companies closer. A preliminary agreement without engagement was signed then between both entities regarding the redemption by Kingfisher of all shares of Mr Bricolage held by ANPF, or nearly 42% of its capital and the shares of this company held by the Tabur Family which accounted for 26.2% of the capital, for a total of 68.1% of its capital at a price of €15 per share. However, this partnership that would have propelled Kingfisher as the leader of the home improvement stores in the world did not take place and this partnership was finally abandoned.

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The factors in favour of a rise in the Kingfisher share price:

A detailed knowledge of the Kingfisher Company and its activities is of course necessary to trade effectively on this stock market share as well as successfully predict the movements in this company’s share price, you should also be able to ascertain if this company will be able to increase its growth in the coming years or if it is threatened by certain factors. For this you will need to compare its advantages and disadvantages, its strengths and weaknesses and this is what we shall now examine here in detail.

We shall commence this comparative study with a detailed summary of the major strengths of the Kingfisher Group:

Primarily we do of course appreciate the strong position of Kingfisher in its activity sector. This group is in fact the leader in its market sector and thereby benefits from a strong advantageous position against the competition.
Another significant advantage of the Kingfisher Group concerns its brand portfolio which is particularly strong and solid and enables the group to reach a wide range of clients and respond effectively to all their requirements.
We should also point out here that the Kingfisher Group benefits from a highly advantageous strategic international position. This group notably achieves solid performance in the emerging markets which enables it to generate supplementary revenue from these large markets.
The Kingfisher Company in fact continues to expand its geographical presence in certain countries such as China where it continues to increase its margins and is challenging the leaders, particularly through strategic acquisitions and partnerships. We observe the same situation with the Russian market where this company has succeeded in obtaining a strong position over time.
Finally, the rise in online retail sales that we have observed over the last few years should continue to be advantageous for this company which is highly present in e-commerce.

The factors in favour of a drop in the Kingfisher share price:

Of course, the Kingfisher Group also has certain weak points that should also be taken into consideration when preparing an investment strategy on this share price on the stock markets. Here as follows are details of this company’s principal weak points:

Firstly and despite a turnover that is increasing overall, the Kingfisher Group only achieves relatively low margins. The returns are not up to what one might expect.
The performance of Kingfisher on the established markets is also relatively weak compared with that achieved on the emerging markets. A large part of the Kingfisher positions are exposed to these markets.
Still relating to the weak points of the Kingfisher Company we also note the particularly intense competition in this activity sector and therefore acknowledge the numerous strong adversaries this company has to face. Local and international competitors around the world could therefore exert a negative influence on the market share of this company and in various sectors.
We also know that the profitability of the Kingfisher Company in terms of operational margins depends greatly on certain other markets such as commodities, particularly the price of steel. It is therefore clear that movements in the foreign exchange rate and the interest rate could also affect the profitability of international operations.
Finally, the Kingfisher activities could also suffer from the global economic recession with a drop in the consumer spending in this activity sector.

As you may observe, Kingfisher offers a number of advantages but also presents certain disadvantages. You will therefore need to take all these factors into account as well as environmental elements before starting your analyses of this asset on the stock market and launching into trading.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

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Analysis before buying or selling Kingfisher shares