There’s just one FTSE 100 development inventory traders are speaking about at present. It’s Rolls-Royce (LSE: RR), in fact, up one other 5% this morning after an outstanding set of full-year outcomes. Pre-tax 2025 earnings jumped 46% to £3.35bn, whereas free money movement hit £3.3bn. CEO Tufan Erginbilgiç additionally thrilled traders with a £2.5bn share buyback.
I’m thrilled too, because the FTSE 100 plane engine maker has pleasure of place in my Self-Invested Private Pension (SIPP). However with a sizeable stake already, I’m not planning to purchase extra. I don’t need to get too high heavy on one inventory. So I’m trying elsewhere for development. And at present there’s a blue-chip inventory beating Rolls that I’ve hardly checked out. Its title?
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Howden shares lead the FTSE 100 at present
Howden Joinery Group (LSE: HWDN). Don’t snicker. The commerce kitchen provider doesn’t have the clout of Rolls-Royce. However its shares are main the FTSE 100 this morning, up nearly 8% in early buying and selling. Sadly, its long-term file isn’t fairly as much as Rolls-Royce ranges.
Even after at present’s soar, the Howden share worth is up simply 4% during the last yr and a modest 18% over 5 years. Buyers have gotten dividends on high, however with a trailing yield of 1.78%, the full return hasn’t been transformative. In contrast, Rolls-Royce is up 113% over one yr and 1,069% over 5.
As we speak, the £5bn firm reported group revenues up 4.1% to £2.42bn, with UK gross sales up 3.8% regardless of a tough market. The fee-of-living squeeze and a slower housing market proceed to weigh on kitchen demand. It’s doing higher abroad. Worldwide income climbed 13.5% as Howden expands in France and the Republic of Eire.
Gross margins improved by 110 foundation factors to 62.7%, as income development and sourcing and manufacturing efficiencies offset value inflation, delivering £41m of productiveness financial savings. Pre-tax revenue rose 5.1% to £344.9m. Howden has launched a brand new £100m share buyback and lifted its full-year dividend to 21.9p per share, up 3.3% from 21.2p.
Buyers are completely happy at present, however the longer-term image is much less sure. Howden mentioned the UK kitchen market is more likely to be broadly flat yr on yr, though this follows years of decline. It stays on observe to fulfill 2026 forecasts.
Rolls-Royce shares are unattainable to disregard
With a price-to-earnings ratio of 18.5, it isn’t clearly low cost. There’s a purpose I’ve by no means switched onto Howden. It could be value contemplating for affected person long-term traders, however lacks pleasure. Particularly in comparison with Rolls-Royce, which has a lot extra in its locker. It’s guiding for £4bn-£4.2bn of underlying working revenue in 2026 and £3.6bn-£3.8bn of free money movement.
Nicely completed Rolls-Royce, and nicely completed Howden too. However for my subsequent large FTSE 100 development play, I’ll look elsewhere. I feel there are higher alternatives on the market now.
