Should I buy this FTSE home-improvement stock as it dips?

It’s been a difficult time for many FTSE stocks in recent months. Macroeconomic volatility has wreaked havoc.

One stock I want to take a closer look at is Travis Perkins (LSE: TPK). Should I buy or avoid the shares?

Home-improvement business

Travis Perkins is one of the UK’s leading building materials and home improvement retailers. It also makes money from the sale and hire of tools. The company sells to trade and DIY customers through its extensive store and online presence.

Over a 12-month period, Travis shares have remained pretty stagnant. They’re trading for 758p, as I write. At this time last year, the shares were trading for 755p. More tellingly for me is the fact that the shares have dropped 29% from 1,078p since the beginning of February. This is when macroeconomic issues started to impact FTSE stocks. Plus, the shares have dipped since a subpar Q3 trading update yesterday.

The bull and bear case

Starting with Travis’ Q3 update, the headline for me was that the business revised its profit projections for the full year from £240m to between £175m and £195m. It cited tough market conditions including rising inflation and the cost-of-living crisis. Revenue and like-for-like sales have both declined by 1.8% compared to the same period last year. This is disappointing but understandable as the housing market is in limbo and home repairs aren’t a priority for many right now.

From a bullish perspective, Travis is in a good position to benefit once any economic recovery begins. It has a great network and market presence. Plus, when you factor in that housing demand, which is outstripping supply in the UK, needs to be addressed, it could recover from its recent woes. Performance and returns could be boosted if and when this happens.

At present, Travis shares are trading on a price-to-earnings ratio of close to 11. This is slightly higher than the benchmark for similar FTSE businesses, which is 10.

Next, Travis shares offer a dividend yield of 4.8%. This is higher than the FTSE 250 average of 1.9%. However, with difficult trading conditions and profits being revised, there is a chance dividends could be slashed or even cut altogether.

A FTSE stock I’m watching for now

I’ve decided I’m going to keep Travis Perkins on my watch list for a few reasons. Firstly, I already own shares in Howden Joinery Group, a similar business in the industry. I feel it’s better equipped to deal with the current headwinds plus I don’t want to overexpose myself in one industry by buying Travis shares. Next, the profit revision is off-putting. I want to see full-year results before I potentially revisit my stance.

There are things to like about Travis, including its passive income offering, if it can maintain its dividend. Plus, a market turnaround in the housing sector and economy generally could help the business recover from the current tough period.