Breedon's financials are reasonably strong and the technical indicators are positive. Could the stock's share price edge higher?

Overview

Breedon Group is a British leading vertically integrated construction materials company. Following its acquisition of Hope Construction Materials in 2016, Breedon grew to become the largest independent construction materials company in the UK. In 2018, it expanded into Ireland with the acquisition of Lagan Group. The company headquarters are based in Breedon on the Hill, Leicestershire, England.    

 

Financials

Looking at the financials of 2021 against 2020, total revenue went up by £304m to £1.232bn and gross profit went up by £131m to £428m. Group operating profit after tax came in at £83.8m, a £36.5m increase YoY. As a result, earnings per share jumped by £2.66 to £4.65. Furthermore, the total assets of the company rose by £49m and total liabilities fell by £13m, hence the group’s total equity rose to £949m in 2021 from £888m in 2020.  

Technicals

From a technical outlook, Breedon’s share price roughly sits around 57p a share. Towards the upside, resistance sits at 58p then at 59p then a key level at 59.9p. A break above the key resistance could see its share price head towards the 62-65p price range. On the other hand, towards the downside, support sits at 55p then at 54p then at 53p. A break below these support levels may see the stock’s share price slide towards the 50-52p price range. Looking at the indicators, MACD is currently positive and RSI reads 59.

Summary

The company’s financials highlight positive growth year-on-year as the revenue and profit continue to rise. Breedon has managed to increase the value of its total assets while lowering the total value of its liabilities, which is not often the case for other businesses. This had a strong influence on the jump in EPS and the increase in total equity at the end of the financial year. If the Group continues its business operations in the same approach in the mid-long term, its share price could be seen to climb much higher. Based on the technicals, the indicators are reasonably positive, which suggests that there is potential for bullish action.