Stock research on global mid-cap companies, Evaluate Research

Evaluate Research

Stock research on global mid-cap companies

Evaluate Research provides institutional quality stock research on small-cap and  mid-cap companies on a global basis, thus helping connect investors with the company.

At Evaluate Research, we provide free of cost to all investors a 20-25 page Initiation Report which evaluates in great detail all aspects of the company:  growth opportunities, catalysts, business description, competitive positioning, SWOT analysis, risks, etc.  In addition, we determine specific price targets for the company based on detailed 5-year complete forecasts of financial statements including IS, BS, CF, ratios, etc.  Finally, whereas many sell-side brokers offer sketchy and irregular ongoing maintenance research of companies, if not outright dropped or termination of coverage, at Evaluate Research we systematically monitor and regularly publish Update Notes covering quarterly earnings, major corporate events, etc.

All of the research reports are broadly and freely disseminated globally to leading Fund Managers and analysts who invest specifically in mid-size equities, and also on leading investment information platforms including: Bloomberg, Thomson Reuters, FactSet etc.

Equity Bottom-Up

Fresh Del Monte Produce / Equity Bottom-Up

Fresh Del Monte reported an excellent set of results for the first quarter [ended March] which were above our expectations. EPS for the quarter stood at $1.57, registering a growth of +97% as compared with the first quarter of last year. This steep rise in the EPS is basically due to the margin expansion. Net sales for the quarter were up 1% to $1,018 million, compared with $1,008 million in the first quarter of 2015. The increase in the revenues was mainly driven by higher sales in the company’s other fresh produce segment [+3%] and a marginal growth in the banana segment [+80bps]. Fresh Del Monte is struggling in the prepared food segment, which represents only about 7% of the overall revenues. The banana and other fresh produce segments have been a steady source of income and growth for the company during the past several years. The company remains prudently focused on improving gross margin, expense control and cash conversion.
Gross margin for the quarter was very strong at 13.8%, up by +390 bps as compared with the same period last fiscal, and was the highest gross margin level during the past 5 years. Strong gross margin reflected lower raw material input costs, lower transportation costs and tight inventory management. Lower oil prices have significantly benefited the company to strengthen its gross margin during this first quarter. However, we believe that the gross margin should come down to its normalized level of 9% as this high level of margin is not sustainable in the long run. We believe that there remains an opportunity to increase margins over time by cutting costs and adding higher margin products to the company’s existing product range. Such a strong gross margin performance was marginally offset by higher selling and marketing cost, which rose by +7% to $47.1 million during this quarter. Operating margin stood at 8.89% up by +330bps as compared with same period last year.

Fresh Del Monte reported an excellent set of results for the first quarter [ended March] which were above our expectations. EPS for the quarter stood at $1.57, registering a growth of +97% as compared with the first quarter of last year. This steep rise in the EPS is basically due to the margin expansion. Net sales for the quarter were up 1% to $1,018 million, compared with $1,008 million in the first quarter of 2015. The increase in the revenues was mainly driven by higher sales in the company’s other fresh produce segment [+3%] and a marginal growth in the banana segment [+80bps]. Fresh Del Monte is struggling in the prepared food segment, which represents only about 7% of the overall revenues. The banana and other fresh produce segments have been a steady source of income and growth for the company during the past several years. The company remains prudently focused on improving gross margin, expense control and cash conversion.
Gross margin for the quarter was very strong at 13.8%, up by +390 bps as compared with the same period last fiscal, and was the highest gross margin level during the past 5 years. Strong gross margin reflected lower raw material input costs, lower transportation costs and tight inventory management. Lower oil prices have significantly benefited the company to strengthen its gross margin during this first quarter. However, we believe that the gross margin should come down to its normalized level of 9% as this high level of margin is not sustainable in the long run. We believe that there remains an opportunity to increase margins over time by cutting costs and adding higher margin products to the company’s existing product range. Such a strong gross margin performance was marginally offset by higher selling and marketing cost, which rose by +7% to $47.1 million during this quarter. Operating margin stood at 8.89% up by +330bps as compared with same period last year.

Fresh Del Monte Produce: 1QFY2016 Earnings Update

Fresh Del Monte [FDP_US] is one of the world’s leading vertically integrated producers, marketers and distributors of fresh fruits, fresh cut fruits, vegetables, prepared fruits, juices, beverages and snacks. The company grown over the past decade and expects to grow at a steady pace driven by numerous catalyst which are likely to unfold in the long run. The company has grown its top-line at a CAGR of 2.35% and bottom-lines at a CAGR of 23.01% in past 4 years. The company has also increased dividend payment by 25% in the year 2013. We expect the company to further increase the dividend payment in the coming years.
Our 12-month price target on the stock is US$ 45 which suggests that the stock is fairly valued at current price levels. We have a neutral rating on the stock. Our price target is based on DCF and P/E methodologies. We apply 14.8x PE on our FY2017 EPS estimate of US$ 3.04 which comes to US$ 45 per share. Our DCF based price is US$45 per share which assumes 8.5% WACC and 2% terminal growth rate. See DCF details further in our report.

Fresh Del Monte [FDP_US] is one of the world’s leading vertically integrated producers, marketers and distributors of fresh fruits, fresh cut fruits, vegetables, prepared fruits, juices, beverages and snacks. The company grown over the past decade and expects to grow at a steady pace driven by numerous catalyst which are likely to unfold in the long run. The company has grown its top-line at a CAGR of 2.35% and bottom-lines at a CAGR of 23.01% in past 4 years. The company has also increased dividend payment by 25% in the year 2013. We expect the company to further increase the dividend payment in the coming years.
Our 12-month price target on the stock is US$ 45 which suggests that the stock is fairly valued at current price levels. We have a neutral rating on the stock. Our price target is based on DCF and P/E methodologies. We apply 14.8x PE on our FY2017 EPS estimate of US$ 3.04 which comes to US$ 45 per share. Our DCF based price is US$45 per share which assumes 8.5% WACC and 2% terminal growth rate. See DCF details further in our report.

Fresh Del Monte Produce: Initiation Report

United States

Fresh Del Monte Produce Inc. produces and markets bananas, pineapples, deciduous fruit, melons, and other fresh produce and non-produce items.  The Company grows, distributes, transports, and markets its products worldwide.

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Fresh Del Monte Produce (FDP US)

Fresh Del Monte Produce: 1QFY2016 Earnings Update

Fresh Del Monte reported an excellent set of results for the first quarter [ended March] which were above our expectations. EPS for the quarter...

Evaluate Research

Fresh Del Monte Produce: Initiation Report

Fresh Del Monte [FDP_US] is one of the world’s leading vertically integrated producers, marketers and distributors of fresh fruits, fresh cut...

Evaluate Research

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