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.

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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.

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