Kingfisher PLC (LSE:KGF) shares flew 16% to 293.4p and to a four-month high on Tuesday, following interim results that analysts said were better than lowered expectations.
The BQ, Screwfix and Castorama owner's numbers were "decent" said analysts at Deutsche Bank, which did not have high hopes due to weaker UK and French macroeconomic data in recent months.
However, the first-half adjusted profit before tax of £368 million was significantly ahead of the consensus forecast of £326 million and even its own £340 million estimate.
UBS analysts said UK retail profit of £344 million was 6% ahead of the consensus, France profits of £72 million compared to a consensus of £63 million and Poland £51 million versus £45 million.
Full-year PBT guidance was also narrowed to the “upper end” of the £480-540 million guidance range, which compares to a consensus estimate of £520 million.
Detusche said it was "Important" that free cash flow guidance was also increased, by £40 million to £480-520 million, with the £300 million share buyback from March also accelerated.
The implied second-half PBT to reach the top end of guidance is roughly £180 million, compared to circa £200 million last year, "which bakes in a reasonable degree of caution on the UK/French consumer as well as increased opex due to wage costs and more tech spend and marketing", the Deutsche analysts said, which looks an "achievable" outcome.
However, while this should protect the shares from too much downside, the German bank's team concluded that "structural concerns" about the Kingfisher investment case "remain relevant" and so they feel it is "hard to see any material bounce on short covering being maintained".
Analysts at AJ Bell said the results "measure up as an achievement to match an amateur taking on a good-sized DIY project", against what feels like fairly gloomy economic circumstances as a backdrop.
Some of the strong showing could be attributed to warm summer weather driving sales of garden furniture and barbeques, but the decision to accelerate the share buyback programme and to guide for a full-year outcome at the top end of current guidance is "a decent show of confidence".
So, even though sales remain fairly sluggish, Kingfisher has kept a tight rein on costs, maintaining and building its market share, and capturing a larger number of trade customers.
While the company is not likely to return to the levels of demand seen during the pandemic, the DIY retailer is "showing signs of setting itself on a sustainable path and investors are reacting accordingly".