What: With the share price of global pallet, container and crate provider Brambles Limited (ASX: BXB) down 5% so far this calendar year – compared with a decline of just 3% in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) – now could be the time to add the stock to your watch list.
Investors who seek out high quality blue-chip stocks should welcome share price weakness as an opportunity to accumulate stocks to add to their long-term portfolio at more attractive prices.
With Brambles just releasing its latest quarterly sales figures and given the share price weakness, now could be a good opportunity for investors to assess the company's prospects.
So What: For the first quarter of the 2016 financial year, Brambles has reported (on a constant currency basis) an 8% rise in sales revenues.
Breaking the result down into its segments, the group achieved double-digit growth in its reusable plastic crates (RPCs) and Containers divisions of 13% and 19% respectively.
Meanwhile, Brambles' larger and more established business of pallets recorded sales growth of 6% with all regions performing well.
CEO Tom Gorman described the quarterly result as reflecting "a solid run rate, consistent with our previously stated guidance foe FY16 sales revenue and Underlying Profit growth of between 6% and 8%, at constant currency."
Now What: With the consensus analyst forecast for the current financial year (according to data supplied by Morningstar) showing earnings per share of 56.2 cents per share and with the stock trading at $10.06 this implies a forecast price-to-earnings ratio of 17.9x.
Given the current market multiple is around 19x, the pricing of Brambles' shares appears to be relatively attractive taking into consideration the pricing of the wider market and its leading blue chip status.
