2018 was another very fine year for Grafton, culminating with another encouraging trading update. Trading profits for the year will now be circa 2.5% above the latest consensus estimate. Formal results on February 28th should confirm that trading profits will have risen close to 50% over the past three years. However, the share price is currently near where it was five years ago. Clearly, outside factors are weighing on the group’s rating, which is now pricing in what we consider a highly unlikely correction in earnings. Hence we believe Grafton is very keenly valued and is currently one of the best ideas in our building materials coverage universe.