Breedon has evolved from a small Aim-listed entity into a leading player in the UK building materials sector, now overseeing the largest cement plant in the country.

Over the past 17 years, the FTSE 250 company has expanded significantly through strategic acquisitions and is now targeting growth in the United States.

In 2022, Breedon acquired BMC Enterprises, based in Missouri, for $300 million. This year, the company announced its intention to purchase Lionmark Construction Companies, also located in Missouri, for $238 million. Rob Wood, Breedon’s CEO, has characterized this deal as one that will enhance earnings right away.

The company’s financial performance for the full year showed promising results, with a 6 percent increase in revenue to nearly £1.6 billion and adjusted cash profits rising by 11 percent to £270 million, achieving a profit margin of 17.1 percent. Although volume sales dropped by 6 percent due to UK market challenges and adverse weather, overall pricing increased by 2 percent.

Investor interest has largely centered on the Lionmark acquisition. While Breedon has been a prominent consolidator in the UK market, its current focus shifts more towards generating cash flow and expanding its footprint in the US.

Lionmark specializes in construction and surfacing, particularly in infrastructure markets. This acquisition is anticipated to significantly increase Breedon’s US presence, potentially allowing its American operations to account for around 20 percent of adjusted cash profits by 2026. Lionmark will complement the BMC business, which has a stronger focus on residential development.

The long-term growth outlook for Breedon remains robust, as market demands are fueled by rising populations necessitating new housing, urbanization driving infrastructure investment, and an aging housing stock requiring more building materials.

Following the new acquisition, analysts from RBC Capital Markets have revised their earnings per share estimates upward for the 2025 and 2026 financial years by 0.8 percent and 3.7 percent respectively, predicting that Breedon’s share price could increase by approximately 31 percent.

In addition to anticipated capital growth, Breedon has adopted a more attractive dividend policy compared to previous years. Since 2021, the company has aimed for a payout ratio of 40 percent of underlying earnings per share. For this fiscal year, the ratio reached 41 percent, with expectations for a stock yield of 3.2 percent over the next 12 months, lower than the FTSE 250 average of 4.8 percent.

With two major US acquisitions now finalized, Breedon presents an appealing growth opportunity, moving beyond a simple income play. Analysts anticipate additional acquisition announcements later in the year, as communicated during a capital markets day in November.

RBC analysts expect Breedon’s net debt to be in the range of £578 million to £587 million for 2025 and 2026, an increase from the initial estimates of £437 million to £445 million. This still indicates a manageable leverage ratio of 1.73 and 1.61 for 2025 and 2026, respectively.

Investors might also find reassurance in the fact that Chairman Amit Bhatia has significantly increased his stake over the last two years. His firm, Abicad Holding, has raised its ownership from 9.7 percent two years ago to 19.1 percent today, valued at approximately £413 million, according to FactSet data.

While Breedon shares climbed nearly 12 percent on the announcement of the Lionmark acquisition, they remain reasonably priced at 12.8 times projected earnings. Considering the solid growth prospects, effective management strategies in acquisitions, enhanced focus on the US market, and a healthy balance sheet, Breedon appears to be a promising investment opportunity.

B&M European Value Retail

B&M European Value Retail has faced a challenging start to the year, witnessing a loss of over 20 percent of its market value following a significant reduction in its full-year profit forecast and the resignation of its CEO.

Last month, the Liverpool-based retailer announced that Alex Russo would be retiring at the end of April after two and a half years in leadership. This revelation coincided with a profit warning, predicting adjusted cash profits between £605 million and £625 million for the fiscal year ending in March, a notable drop from previous expectations of £620 million to £660 million.

Analysts at Panmure Liberum suggested that Russo’s retirement and the profit forecast downgrade are likely interconnected, and investors may also be wary of Bobby Arora’s anticipated departure, the final member of the billionaire family that significantly contributed to B&M’s expansion.

The company, known for its diverse range of products including groceries, home goods, toys, and DIY tools, has experienced substantial growth in the past decade alongside other discount retailers like Aldi and Lidl. However, growth has stalled over the past year, and this recent profit forecast reduction wasn’t entirely unexpected.

This analysis last labeled B&M as a hold in October, citing uncertainties regarding the company’s performance in a challenging consumer market.

The City seems to be losing confidence in B&M. Its shares are currently valued at a modest 7.9 times projected earnings, with a forward dividend yield of 5.7 percent indicating that the stock has entered value territory. While sluggish growth is expected to improve in 2026 with easier comparisons, ongoing disappointing performance has raised concerns about whether the company can regain investor trust. Cash returns alone won’t suffice to appease shareholders indefinitely.

Advice: Hold. Why: Strong brand presence but operating in a weak market.