Down 25% and 33% in 6 months, are these 2 FTSE 100 fallers bargains?

Over the past six months, the FTSE 100 index is up 7.9%. That’s pretty good, given the sudden market crash in April. But looking at the Footsie’s top performers over six months, I count 19 shares up by more than 25%. Indeed, the top gainer has soared by 120.5% in half a year.

The Footsie’s big fallers

At the other end of the scale lie the FTSE 100‘s biggest losers. I count five shares down 20% or more in six months. Here are two that are part of my family portfolio.

1. Diageo’s disaster

The Footsie’s third-worst performer over six months is drinks giant Diageo (LSE: DGE). Falling sales and stocking issues have sent shares in the maker of Guinness stout and Smirnoff vodka spiralling southwards.

Over six months, this stock is down 24.7%, while it has slumped by 25.9% over one year and 34.6% over five. Though these returns exclude dividends, adding back this cash still produces negative returns over various timescales.

As I write, Diageo shares trade at 1,895.5p. This values the group at £42.6bn — less than half its value at end-2021 when the share price hit new highs. After sustained falls, this stock now trades on under 15.8 times trailing earnings, delivering an earnings yield of 6.3%.

The sliding share price has also boosted Diageo’s dividend yield to nearly 4.2% a year, well above the FTSE 100’s yearly cash yield of 3.6%. What’s more, this payout is covered a decent 1.5 times by historic earnings.

In short, Diageo seems to be a ‘fallen angel’ — a long-established business going through temporary troubles. Then again, sales of alcohol are being hit by competing group activities, including legal (and illegal) cannabis, video gaming, and social media.

That said, I’ve been wrong about this stock before, having paid 2,806.6p a share for our existing holding — a paper loss of 32.5%. However, with these shares now trading at bargain-bin levels, we’ll keep hold of our stake in this potential recovery play.

2. Bunzl’s battering

Another FTSE 100 share to take a beating recently is Bunzl (LSE: BNZL). Shares in this British distributor of workplace supplies collapsed 25.6% on 16 April, when it released disappointing quarterly results. I saw this price plunge as an opportunity to buy into a good business at a fair price, paying 2,275p a share for our stake.

At first, my hunch paid off, with the shares bouncing back to close at 2,538p on 12 May. Alas, it’s all been downhill over the past month. As I write, the shares now trade at 2,222p, valuing this business at £7.3bn. Then again, the more these shares fall, the more I see them as a bargain buy based on the compay’s fundamentals.

For the record, this stock has lost 33.2% over six months and 25.9% over one year, but has gained 5.7% over five years. After these falls, it trades on 14.9 times trailing earnings, producing an earnings yield of 6.7% a year. Also, the dividend yield has climbed to 3.3% a year, covered over twice by historic earnings.

Like Diageo, I see Bunzl as a classic value/dividend/recovery play. However, if sales growth continues to slow, or new trade tariffs hit its North American operations, then its earnings, profits, margins, and cash flow could go lower.

The post Down 25% and 33% in 6 months, are these 2 FTSE 100 fallers bargains? appeared first on The Motley Fool UK.

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The Motley Fool UK has recommended Bunzl and Diageo. Cliff D’Arcy has an economic interest in Bunzl and Diageo shares. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.