Strategy yielding results; outlook prudently cautious

Kingfisher’s better than expected H126 results reflect the success of its trade and e-commerce growth initiatives along with increased big-ticket spending in Q2. Although management has raised FY26E Adj. PBT and free cashflow guidance, there is a degree of macro-economic caution embedded into implied H226 profits. We raise Adj. EPS by 6% for FY26E and 2% for FY27E and see scope for further upgrades if sales trends continue to improve. We raise our FV from 355p to 365p, equivalent to 14x cal 2026 PER and a c.3.5% dividend yield.

Although Kingfisher’s share price has regained some of its recent weakness it still trades on c.11x cal 2026 PER which we think undervalues the group’s growth potential and cash-generative appeal.