Why the Boral (ASX:BLD) share price has underperformed the ASX 200 in the last 3 months

Shares in the building supplies group have been struggling lately. Let's take a look.

| More on:
Upset man in hard hat puts hand over face after Armada Metals share price sinks

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Boral Limited (ASX: BLD) share price is having a reasonably strong year so far. Shares in the building materials supplier are up 23.7% in 2021 and outperforming the S&P/ASX 200 Index (ASX: XJO).

However, it hasn't all been going shareholders' way this year. In fact, the Boral share price is down 16.2% in the three months since 28 June, closing on Tuesday at $6.15 apiece. That means that the ASX share has actually underperformed the broad market index which has edged just 0.4% lower in the same period.

So, why is the building supplies company underperforming right now?

What's with the Boral share price lately?

June and July was an interesting period for the Boral share price. The company was under siege at the time with Seven Group Holdings Ltd (ASX: SVW) ramping up its takeover efforts.

Boral recommended shareholders reject Seven's updated offer for up to 34.5% of the company at $7.40 per share, saying that undervalued the company by 40%.

Naturally, the Boral share price hovered around that proposed takeover mark of $7.40 per share for quite some time. Then, in late July, it started sliding as Seven took control of the company.

Seven's move on Boral coincided with shares in the building supplies group falling lower in late July and most of August. The Aussie conglomerate accumulated 69.6% of the company's voting rights by 30 July and the Boral share price was under pressure.

Some saw the move as deception, others a shrewd business decision. However, while the ASX 200 enjoyed a reasonably positive earnings season, the same can't be said for Boral.

How did Boral perform in FY21?

The company reported its full-year results on August 24 including the below:

  • Revenue from continuing operations down 6% on the prior corresponding period (pcp) to $2.92 billion
  • Underlying earnings per share (EPS) from total operations up 42% on pcp to 20.6 cents
  • Return on funds employed (ROFE) down 50 basis points (bps) from FY2020 to 8.3%
  • No final dividend declared

The "challenging market conditions" saw the Boral share price slump 8% in two days either side of the result.

That, combined with a steadying in the broad market index, has seen the building supplies company underperform the broad market index in the last three months.

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Materials Shares

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Materials Shares

ASX mining in April 2024: The best stock to buy right now

Analysts at Bell Potter think this mining stock could offer big returns.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

The Core Lithium share is down 27% in March: What's next?

Times have been hard for this lithium miner's shareholders. Will things improve?

Read more »

A female worker in a hard hat smiles in an oil field.
Materials Shares

Why it's a great day to own BHP shares

The Big Australian's shareholders have reason to smile on Thursday.

Read more »

a business man in a suit holds his hand over his eyes as he bows his head in a defeated post suggesting regret and remorse.
Materials Shares

Why did this ASX All Ords stock just crash 36%?

Investors have been hitting the sell button on Tuesday.

Read more »

A miner in a hardhat makes a sale on his tablet in the field.
Materials Shares

Lake Resources share price surges on sustainable lithium news

Lake Resources shares are enjoying a welcome lift today.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Materials Shares

Mineral Resources shares fall despite 'exceptional results'

This mining and mining services company has provided an update on its energy business.

Read more »

A man looking at his laptop and thinking.
Materials Shares

Are Pilbara Minerals shares in the buy zone or overvalued?

Here's what Bell Potter is saying about the lithium giant.

Read more »

Three guys in shirts and ties give the thumbs down.
Materials Shares

3 reasons to sell Core Lithium shares

This lithium miner's decline may not be over according to Goldman Sachs.

Read more »