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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Kerry Group Plc | KYGA | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| -1.60 | -1.90% | 82.70 | 16:35:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 83.40 | 80.30 | 83.60 | 82.70 | 84.30 |
| Industry Sector |
|---|
| FOOD PRODUCERS |
| Top Posts |
|---|
Posted at 04/5/2016 18:34 by wexboy 2016 – The Great Irish Share Valuation Project (Part I):Company: Kerry Group (KYG:ID) Last TGISVP Post: Here (also, see here & here) Market Cap: EUR 14,280 M Price: EUR 81.15 KYG’s price rally & current multiple suggests an outstanding earnings record. In fact, for many shareholders, that’s a given…I wonder if they ever check the figures!? The reality’s actually quite different, as I’ve highlighted before: While Kerry’s trading margin has steadily improved (from 9.4% in 2011, to 11.5% in 2015), it’s based on underlying revenue growth of just 3.1% pa in the last 5 years – which translates to a declining trend in adjusted EPS growth of 11.1% in 2011, an average 10.0% in 2012-2013, and an average 8.2% in 2014-2015. Somehow…that&# Yeah, I know: Kerry has an incredible growth trajectory ahead as it migrates from Consumer to its higher margin Taste & Nutrition business, cranks up its acquisition machine, benefits from increasing economies of scale, yada yada. But that was the pitch five years ago, and also ten years ago…how much longer will investors ignore actual feedback? At this point, they’d do well closing their ears (to the story) & opening their eyes (to the actual figures). Noting a predictable shortfall in Kerry’s operating FCF, a 1.0 P/S multiple (on €6.1 billion of revenue) is adequate for its current 11.5% trading margin. With net finance cost just under 10% of trading margin, an additional €0.7 billion debt adjustment is appropriate – which we’ll haircut by 50%, as usual. As for earnings, Kerry lacks the growth to deserve a premium multiple, but obviously has a stable/high quality business & enjoys consistently positive investor sentiment, so a 12.0 P/E is warranted: (EUR 3.015 Adj Dil EPS * 12.0 P/E + (6,105 M Revenue * 1.0 P/S + 714 M Debt Adjustment * 50%) / 176 M Shares) / 2 = EUR 36.45 Kerry is ridiculously overvalued, a dangerous blue chip if I ever saw one…not that I’ll persuade many of its devoted fans. But the greater the multiple & blind faith it enjoys, the more it risks being felled, if/when an abrupt change in sentiment finally hits…as we saw with Aryzta. Which doesn’t mean I’d necessarily advocate KYG as a short – many of its shareholders are buy & hold types, who are pretty oblivious to price & valuation, so it might require really serious/unexpected bad news to actually provoke a crisis of confidence. Or perhaps the shares end up trading sideways for years on end, with buyers slowly drifting away…if so, and shareholders think my call on Kerry was wrong, they’re bloody welcome! Price Target: EUR 36.45 Upside/(Downside): (55)% For related links/graphs/files, and more TGISVP analyses/price targets: Google the Wexboy investment blog. |
Posted at 11/9/2009 12:33 by lbo http://www.irishtimeKerry Group also continued on its upwards trajectory. After tentatively breaking through the 20 mark in recent days, the food group is now being picked up on investors' radars, which is adding to the positive momentum surrounding the stock, according to brokers. It closed at 21 yesterday, a gain of 5 per cent, or 1 |
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