Greencore this morning (26 November) revealed an increase in annual earnings and sales. The convenience food group said it enters its new financial year with “good momentum”, despite operating in a “weak” consumer environment. Analysts offered a relatively optimistic review of the results.
Investec analyst Nicola Mallard
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“A tougher backdrop for Greencore in FY13, but the group has still delivered very respectable EPS growth (+13%) and reduced debt at a faster pace than we expected. UK momentum as we head into FY14E looks a little better, the horsemeat scandal will be absent and further progress is expected from the USA as the compant consolidates on recent business additions. We lift forecasts by 1.5% in FY14E (excl. IAS19 changes) and reset our target price to 202p, reiterating our ‘buy’ recommendation.”
Panmure Gordon analyst Damian McNeela
“Greencore’s results are slightly better than expected with EPS rising by 13.3% to 14.5p. Given the company’s strong position in growth categories in the both the UK and the US, we believe Greencore is well positioned to deliver a further 9% EPS growth in FY 2014E. Although input cost inflation is likely to edge up next year driven by stronger dairy and protein markets, we expect the positive sales momentum across most of the business to continue into FY2014E and maintain our forecasts for 12% adjusted PBT growth to GBP67.9m equating adjusted EPS growth of 9% to 15.4p.”
Shore Capital analyst Darren Shirley
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By GlobalData“Looking into the 2013/14, we believe the UK grocery market has remained subdued in the early weeks of Greencore’s financial year, albeit we believe Greencore exited the 2012/13 financial year with good momentum in the Food to Go category which has been maintained. We also note management’s comments around a further recent pick up in input cost pressure in the dairy and protein markets. As such, we do not anticipate changing our below consensus CPTP forecast of GBP64.5m at this stage, whilst noting there maybe upward tweaks to our 14.5p EPS forecast depending upon tax guidance.”
Davy Research
“Greencore reported solid FY 2013 numbers, with a small beat at the EPS line driven by tax and interest. It is well positioned for FY 2014.
“The three pillars of our investment thesis remain intact: cash conversion, consistent delivery in the UK and a burgeoning US opportunity. Although Greencore no longer ticks the mispriced investment box, it can continue to deliver for shareholders with a growth platform in the US supported by a resilient cash/profit pool in the UK. Current forecasts of 14.8p look light in the context of the FY 2013 out-turn (14.5p).”
