DAVY VIEW

Grafton’s latest update pointed to a recent weakening in trading conditions in the UK. We have adjusted forecasts for this, as well the Polvo acquisition and IFRS 16. Our revised diluted adjusted EPS forecast for this year is now 63p (previous: 66.6p) and 67.3p for 2020 (previous: 67.7p). The stock is down nearly 20% since mid-May, which strikes us as unduly penal. Grafton is attractively valued and, regardless of some near-term headwinds in the UK, the group overall remains very well positioned. We reiterate our ‘Outperform’ recommendation.