The B&M European Value (LSE: BME) share price is down 39% in the past 12 months. But on Tuesday (15 April), the shares jumped sharply when the market opened, putting on a quick 7%.

The price has faded a bit, but as I write it’s still 5% ahead. It’s due to a trading update for the year ended 29 March.

Revenue growth

The owner of B&M stores in the UK and France, and the UK Heron Foods chain, saw full-year revenue rise by 3.7% to £5.6bn.

Like-for-like revenue fell a little in the two UK operations. That doesn’t surprise me, as cut-price competition has been fierce. Even Tesco expects lower profit this year, seeing a potential for supermarket price wars.

Still, positive like-for-like revenue in France offset that. And the overall revenue growth looks good to me in the current high-inflation economy. Perhaps as a sign of better to come, the fourth quarter showed upticks all round on a year-on-year basis.

New store openings in the UK and France have progressed as expected. I see that as another good sign, going against the battering the retail sector has been enduring.

FY Outlook

B&M expects adjusted EBITDA for the year to come in “above the midpoint of our £605m-£625m guidance range.” That’s a bit down on 2024’s figure of £629m, but not by much. And again I’d rate it as a solid result considering the retail pressure of the past 12 months.

Whether to consider buying BME shares now is the big question. And for me, it all pivots on whether I think there’s sufficient safety room in today’s share valuation to cover the risks.

Generally, I’ll avoid buying shares in a company that competes on price alone. It’s why I don’t invest in airlines. Food and other consumables are a bit more essential than flights though, so I dislike the idea less in the retail business.

The next few years

Forecasts show earnings per share (EPS) dipping about 9% this year. That’s a bit more than the forecast drop in EBITDA. But this latest update makes me think it’s probably not far off the money, if perhaps a tiny bit pessimistic.

The forecasts don’t show EPS getting back above 2024 levels until 2027. And that could mean a couple of years of more uncertainty for the B&M share price.

The company is also on a search for a new CEO, as Alex Russo will retire from the role from 30 April. That’s another unknown. But at least we should expect “an announcement in the coming weeks.“

Valuation, valuation

At interim time, the company reported a net debt to adjusted EBITDA ratio of 1.2 times. That’s fine in my books, and I don’t see any liquidity concerns.

We’re looking at a low forward price-to-earnings (P/E) ratio of nine. And it would drop to eight on 2027 forecasts. With a forecast 5% dividend yield on the cards, I think that provides the safety I need and more. In my books, B&M is one to consider at this valuation level.