Rexel Transitioning From "Repair" To Growth

Although Rexel (OTCPK:RXEEY) (RXL.PA) has a decent enough trailing 12-month return (about 20%), the shares have ended up basically flat since my last update on this large electrical distributor, as internal progress with a variety of turnaround efforts has been offset by end-market deterioration. While management believes they’ve exited the “repair phase” of the turnaround, and I see meaningful growth opportunities in markets like the U.S., the reality is that macro indicators are still mixed, and the company is still investing in expanding its digital capabilities.

I still believe that Rexel shares are undervalued and that this stock can benefit from some company-specific drivers in 2020 that is looking pretty “meh” for most industrials. I believe the shares are more than 20% undervalued if Rexel can deliver low single-digit revenue growth and high single-digit FCF growth, but I must also note that the ADRs are illiquid and not all readers may wish to go to the trouble of buying the local shares.

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Rexel Transitioning From "Repair" To Growth