1 FTSE 100 stock I'd dump for this growing mid-cap stock

B&M Home Store
B&M Home Store

Screwfix and B&Q owner Kingfisher(LSE: KGF) delivered its interim results this morning and the shares are up more than 5% as I write, at 312p.

However, since 2014 the stock has slipped more than 27% and the firm is engaged in a five-year programme aimed at rejuvenating its customer offering to stimulate sales and to put the company on a growth trajectory. But you can't get out of a rut without feeling a few bumps, and today's report talks about short-term business disruption caused by some of the changes being made.

I think you can see some of the discomfort in the figures. At constant currency rates, sales declined 1.3% compared to a year ago and adjusted basic earnings per share slipped 4.4%. Yet in a show of confidence, the directors pushed the interim dividend up 2.5%, despite reservations about "the backdrop for the second half in the UK and France, as previously guided."

Escalating expectations

Nevertheless, they are confident that the firm will hit full-year expectations, which City analysts have down as a 4% decline in earnings per share, so the current year's wobbles seem contained. For next year, analysts are far more optimistic, predicting a 13% uplift in earnings.

If you believe in the power of Kingfisher's transformation programme you can pick up the shares today on a forward price-to-earnings (P/E) ratio of just under 12 for 2018 and the forward dividend yield runs a little over 3.7%. Those forward earnings should cover the payout more than twice. But I find it hard to become excited over Kingfisher and would rather take my chances with fast-growing discount retailer B&M European Value Retail SA (LSE: BME).

I think the comparison is interesting because B&M targets big swathes of the same markets that Kingfisher is active in, such as those for paints, tools, wallpaper, furniture, curtains, duvets, DIY and gardening products, among others. The firm describes itself as "the UK's leading multi-price value retailer". As well as competing with the likes of Kingfisher, it is also part of the assault on the London-listed supermarket chains selling a large array of highly-discounted groceries and sweets.

Strong growth

Back in July, B&M talked of strong growth in its most-recent quarter "despite challenging trading conditions and economic uncertainty generally." The firm's revenue jumped more than 18% in the period, 7.3% of which came from like-for-like growth, which demonstrates the increasing popularity of the company's offering. Anecdotally, my local branch always seems to be heaving, whatever time of day, or day of the week, I choose to pop in.

We can get an idea of the pace of expansion by the fact that nine new UK stores were opened in the one quarter and four in Germany from what the directors describe as a "strong pipeline of new stores planned for the current year."

City analysts expect earnings to lift 18% for the current year and 17% for the year ending in March 2019. Meanwhile, at the current 374p share price, B&M trades on a forward P/E rating around 18. I think the firm is well worth your research time right now.

This could be an even better FTSE 250 buy

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Kevin Godbold owns shares in B&M European Value Retail SA. The Motley Fool UK has no position in any of the shares mentioned. 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.