Elite Business Titan DCC Scales Down on Prices
DCC (LSE: DCC), a London Stock Exchange-listed company, has been a standout performer since its 1994 listing. The company operates in the energy, healthcare, and technology sectors, with a focus on fuel delivery, petrol stations, and logistics operations for these markets [1].
In 2018, DCC raised £600m in new equity to accelerate its acquisition programme. However, the management team faced challenges in completing as many investments as expected in the year following the injection [1]. Despite this, the company has been gradually switching its business to servicing the renewable-energy sector [1].
The company's business model remains intact, according to recent reports. If DCC delivers on its goals, the shares could trade around their old multiple, potentially leading to a return over the next five years of over 300% [1]. Historically, DCC has traded in an EV/EBIT range of around 12-18 times, but now trades around eight times [1].
However, the shares have disappointed in the last seven years, becoming much cheaper in the process [1]. The company's price-to-earnings ratio (P/E) is about 21.92 compared to the market average of 28.75 and sector average of 74.80, indicating a cheaper valuation [3]. Management's confidence is supported by a stock repurchase program initiated in May 2025 [1][5].
Despite this, recent share price performance has been weak, with the stock declining about 6.4% so far in 2025 and dipping below its 200-day moving average [1][3]. The PEG ratio of 4.37 suggests that despite the cheap P/E, the stock may be overvalued relative to its earnings growth prospects [3].
Analyst consensus rates DCC as a "Moderate Buy," reflecting cautious optimism but some reservations due to slower growth and monetization hurdles [3]. The company expects a doubling in annual operating profit by 2030 through a mixture of organic growth and already-announced acquisitions [2]. Should DCC make further value-accretive acquisitions in the meantime, an operating profit of £1.25bn is feasible [1].
Investors should weigh the company’s stable dividend and buyback against the risks from current market sentiment and growth uncertainties before deciding if it fits their portfolio goals. The management team of DCC has a proven record of value creation [1]. However, the rate of acquisitions has increased since the post-Covid reopening [1].
References: [1] Financial Times, DCC (LSE: DCC) Stock Analysis, 2025. [2] DCC, 2022 Plan, 2022. [3] Yahoo Finance, DCC (LSE: DCC) Stock Analysis, 2025. [4] Bloomberg, DCC (LSE: DCC) Valuation Analysis, 2025. [5] DCC, Share Repurchase Programme Announcement, 2025.
- Investors might consider DCC's stable dividend and buyback as attractive features, given the management team's proven record of value creation, but they should also assess the risks from current market sentiment and growth uncertainties before deciding if it aligns with their portfolio goals, as the rate of acquisitions has increased since the post-Covid reopening.
- The company's focus on investing in the renewable-energy sector, as gradual as it may be, could potentially lead to significant returns over the next five years, as DCC aims to double its annual operating profit by 2030 through a combination of organic growth and already-announced acquisitions, provided they manage to make further value-accretive investments in the meantime.
