Last Update 17 Feb 26

DCC: Share Buybacks And 2026 Outlook Will Support Re-Rating Potential

Analysts have trimmed their price targets for DCC by £4.00 to reflect a slightly softer revenue outlook, a lower future P/E assumption of around 16.5x, and some caution on staffing and chemical distribution exposure highlighted in recent research.

Analyst Commentary

Bullish Takeaways

Bullish analysts still see DCC as part of a wider European business services group that can justify a mid-teens P/E. This suggests some confidence in the company’s ability to support its current earnings profile.
The revised price target of £57.50, down from £61.50, still sits meaningfully above many historical trading ranges for companies on lower P/E multiples. This implies that analysts see room for execution to support that valuation.
The focus on a 2026 outlook indicates that some analysts are willing to look beyond near term sector noise and assess DCC on its ability to deliver consistent performance over a multi year horizon.
Keeping DCC within a preferred coverage group of European business services names signals that, while not top ranked, the company remains on the radar for investors looking for established operators rather than early stage stories.

Bearish Takeaways

Bearish analysts have moved the rating to Equal Weight from Overweight. This reflects reduced conviction in near term outperformance versus peers and points to a more balanced risk and reward profile.
The cut in price target by £4.00, combined with a lower assumed P/E of about 16.5x, indicates greater caution on how much investors may be willing to pay for DCC’s earnings given current revenue expectations.
Concerns around staffing and chemical distribution exposure suggest that parts of DCC’s portfolio are seen as more vulnerable to cyclical or sector specific headwinds, which could weigh on growth if these segments underperform.
The fact that other companies are preferred in the same European services coverage group implies that, within the sector, DCC is currently viewed as less compelling on a risk and reward or execution basis than some alternatives.

What's in the News

DCC reaffirmed guidance that the year ending 31 March 2026 is expected to be a year of good operating profit growth on a continuing basis, with progress on group development activity (Corporate Guidance, DCC plc).
The company reported that for the period from 17 November 2025 to 17 December 2025, it repurchased 11,605,415 shares, representing 11.82% of its shares, for a total of £600m (Buyback Tranche Update, DCC plc).
DCC confirmed completion of the £600m share buyback announced on 17 November 2025, covering 11.82% of its shares, which reduces the share count and may affect earnings per share calculations going forward (Buyback Tranche Update, DCC plc).

Valuation Changes

Fair Value: Modelled fair value is unchanged at £61.24, so the central valuation anchor remains the same despite other input tweaks.
Discount Rate: The discount rate has eased slightly from 9.00% to about 8.98%, a very small adjustment that has only a modest effect on the valuation output.
Revenue Growth: The assumed revenue trend has shifted from roughly a 3.04% decline to about a 2.70% decline, pointing to a slightly less cautious view on top line movement.
Net Profit Margin: The assumed profit margin has risen from around 2.40% to about 2.84%, indicating a somewhat more optimistic stance on profitability for the same revenue base.
Future P/E: The future P/E assumption has fallen markedly from about 19.75x to 16.52x, which lowers the multiple investors are assumed to pay for earnings even as margin expectations improve.

DCC's strategic pivot to the Energy business focuses on renewable fuels for growth, divesting other sectors to boost net margins.
Expansion in biofuels, liquid gas, and solar solutions aims to elevate DCC as a leader in cleaner energy and improve earnings stability.
Focus on Energy increases exposure to sector-specific risks, potentially affecting revenue stability and net margins due to market fluctuations and regulatory changes.

Catalysts

About DCC

Engages in the sales, marketing, and distribution of carbon energy solutions worldwide.What are the underlying business or industry changes driving this perspective?

DCC plans to focus solely on their Energy business, recognizing it as their most compelling growth opportunity. This strategic shift is expected to drive strong returns and enhance revenue growth by concentrating resources on high-growth areas like renewable fuels and energy management.
The sale of DCC Healthcare, expected to complete in 2025, will simplify operations and unlock substantial shareholder value. This could positively affect net margins by reallocating capital to higher return areas, particularly their Energy division.
DCC aims to become a leader in biofuels and liquid gas, focusing on the transition to cleaner energy. This strategy is expected to significantly boost revenues by capturing market share in these growing energy sectors.
The plan to expand the energy management business into a pan-European leader in solar solutions aims to increase recurring revenue streams, which could improve overall earnings stability and growth.
The strategic review of DCC Technology, including an operational integration program, seeks to enhance profitability and consider future divestment or restructuring, potentially improving net margins and increasing available capital for energy-focused investments.

DCC Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming DCC's revenue will grow by 1.1% annually over the next 3 years.
Analysts assume that profit margins will increase from 1.2% today to 1.9% in 3 years time.
Analysts expect earnings to reach £361.9 million (and earnings per share of £4.39) by about September 2028, up from £208.2 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.6x on those 2028 earnings, down from 22.2x today. This future PE is lower than the current PE for the GB Industrials industry at 22.2x.
Analysts expect the number of shares outstanding to grow by 0.1% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.82%, as per the Simply Wall St company report.

DCC Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The sale of DCC Healthcare, despite being a long-term growth business, could generate uncertainty in revenue and disrupt the existing balance of the business, leading to potential variability in the company's revenue stream.
DCC's plan to focus solely on the Energy business exposes it to sector-specific risks, such as fluctuations in energy prices and regulatory changes, which could negatively impact net margins.
A strong reliance on the Energy business, which already accounts for 74% of profits, makes DCC vulnerable to any industry downturn, potentially affecting earnings stability.
The operational improvement program for DCC Technology, with costs estimated at £20-30 million, poses execution risks that could temporarily depress net earnings if inefficiencies and integration challenges arise.
Significant reduction in the carbon intensity of profits, while a positive long-term goal, may require substantial capital investments, pressuring short
to medium-term free cash flow and constraining net earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of £62.647 for DCC based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £90.0, and the most bearish reporting a price target of just £44.91.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £18.6 billion, earnings will come to £361.9 million, and it would be trading on a PE ratio of 21.6x, assuming you use a discount rate of 8.8%.
Given the current share price of £47.48, the analyst price target of £62.65 is 24.2% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Expansion Into Biofuels And Solar Solutions Will Elevate Leadership In Cleaner Energy