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is kerry group undervalued

  • 12-03-2015 5:24pm
    #1
    tied_up
    Banned (with Prison Access) Posts: 9 ✭


    compared the following two companies which operate in the same sector

    kerry PE = 23
    glanbia PE = 33

    kerry PER = 21.6 for this year and 19.8 for 2016
    glanbia PER = 26 for this year and 22.5 for 2016

    kerry PB = 4.19 for this year and 3.57 for 2016
    glanbia PB = 5.78 for this yea and 4.76 for 2016


    kerry operating margin = 11.3% for this year and 11.8 % for 2016
    glanbia operating margin = 7.38% for this year and 7.8% for 2016

    above figures are from the website 4 traders and LSE uk

    glanbia are generating huge profits on their sports drink business in the usa and this is seen as the star segment , im not sure if kerry have a comparable segment of their company to rival it so perhaps this justifies the near 50% premium glanbia has over kerry


Comments

  • #2
    Value Hunter
    Closed Accounts Posts: 337 ✭✭Value Hunter


    Hardly undervalued just because Glanbia are even more richly valued.

    It's been a great stock to own, but trading at over 4 times P/B and roughly 20 times earnings ain't cheap.


  • #3
    lucky john
    Registered Users, Registered Users 2 Posts: 838 ✭✭✭lucky john


    2 fantastic companies with great futures. however as an investment opportunity
    its debatable how much upside can be left there now. not saying they wont continue to keep on going but value for money????.


  • #4
    househero
    Registered Users, Registered Users 2 Posts: 1,094 ✭✭✭househero


    seriously?

    the lifting of the milk quota is QE for dairy

    either of them could be swallowed up by Fonterra


  • #5
    Value Hunter
    Closed Accounts Posts: 337 ✭✭Value Hunter


    househero wrote: »
    seriously?

    the lifting of the milk quota is QE for dairy

    either of them could be swallowed up by Fonterra


    Very unlikely for either to be swallowed up.

    Kerry Group is twice the size of Fontera and even Glanbia are a similar size


  • #6
    tied_up
    Banned (with Prison Access) Posts: 9 ✭tied_up


    Value Hunter wrote: »
    Hardly undervalued just because Glanbia are even more richly valued.

    It's been a great stock to own, but trading at over 4 times P/B and roughly 20 times earnings ain't cheap.

    neither are cheap right now , thats obvious , however , both have been richly valued for at least two years, the sector is seen as having plenty of growth going forward

    relative to glanbia , kerry appears attractively priced to me

    i thought glanbia was topped out around 12 euro as it stayed under that figure for over a year , towards the end of 2014 it broke out and is up 30% since the beginning of the fourth quater of 2014


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  • #7
    tied_up
    Banned (with Prison Access) Posts: 9 ✭tied_up


    househero wrote: »
    seriously?

    the lifting of the milk quota is QE for dairy

    either of them could be swallowed up by Fonterra

    fonterra is not a PLC , besides their would be uproar if the two main players in the irish dairy sector were bought out by the largest operator in the country which is the biggest rival to ireland when it comes to milk production


  • #8
    tied_up
    Banned (with Prison Access) Posts: 9 ✭tied_up


    Value Hunter wrote: »
    Very unlikely for either to be swallowed up.

    Kerry Group is twice the size of Fontera and even Glanbia are a similar size

    fontera is bigger than kerry and glanbia combined


  • #9
    Value Hunter
    Closed Accounts Posts: 337 ✭✭Value Hunter


    tied_up wrote: »
    fontera is bigger than kerry and glanbia combined

    Fonterra's market cap is about €6 billlion, Kerry groups is €11.5 billion.

    Glanbia is about €5 billion


  • #10
    tied_up
    Banned (with Prison Access) Posts: 9 ✭tied_up


    Value Hunter wrote: »
    Fonterra's market cap is about €6 billlion, Kerry groups is €11.5 billion.

    Glanbia is about €5 billion

    kerry had revenue last year of 5.75 billion

    glanbia had revenue of 2.54 billion

    fonterra had revenue of 22 billion new zealand dollars last year


  • #11
    Value Hunter
    Closed Accounts Posts: 337 ✭✭Value Hunter


    tied_up wrote: »
    kerry had revenue last year of 5.75 billion

    glanbia had revenue of 2.54 billion

    fonterra had revenue of 22 billion new zealand dollars last year


    And a net profit of NZ$180 m

    A fraction of Kerrys.

    Anyway this is way off topic, the poster was saying kerry or glanbia could be swallowed up by Fontera. We know this isn't possible due to kerry and glanbia's large market cap.


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  • #12
    tied_up
    Banned (with Prison Access) Posts: 9 ✭tied_up


    Value Hunter wrote: »
    And a net profit of NZ$180 m

    A fraction of Kerrys.

    Anyway this is way off topic, the poster was saying kerry or glanbia could be swallowed up by Fontera. We know this isn't possible due to kerry and glanbia's large market cap.

    you are correct , was unable to delete previous post

    according to bloomberg , fonterra has a market cap of less than 10 billion NZD so six billion euro sounds about right


  • #13
    tied_up
    Banned (with Prison Access) Posts: 9 ✭tied_up


    Value Hunter wrote: »
    And a net profit of NZ$180 m

    A fraction of Kerrys.

    Anyway this is way off topic, the poster was saying kerry or glanbia could be swallowed up by Fontera. We know this isn't possible due to kerry and glanbia's large market cap.

    neither glanbia or kerry are close to screaming buys right now , in fact both are quite expensive but they are also growth companies , albeit in an industry which isnt traditionally known as high margin

    i suspect the market is giving them a premium due to their expansion in the high margin sports drink industry , glanbia has gone in big in the usa in this area


  • #14
    lucky john
    Registered Users, Registered Users 2 Posts: 838 ✭✭✭lucky john


    Any prospect of the two merging? The competition athurity might have something to say I'm sure. However out side of ireland is where they both make their money and in different product areas. Even inside ireland, glanbia's deal last year has seperated the plc from the creamery business here somewhat. There would be enough synergies to improve a new company and its size would protect it from any targeting. It would be a hell of a company.


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