FDP Fresh Del Monte Produce Snapshot

Overall Score: 1

Chart: 1

 

 

 

 

 

 

 

 

 

 

 

Analyst Opinion: -1

Strong Buy		1
Buy		0
Hold		4
Underperform		1
Strong Sell		0

 

Insiders: 1

CEO Amir Abu-Ghazela buys 100,000 shares at 22.59 between 3-1-12 and 3-6-12.

Management Discussion and Analysis: 0 

 

Government and Regulation Risk

Natural Disaster Risk

Sales rose slightly largely due to higher prices, partially offset by lower volumes

Gross margins improved slightly because of higher sale prices, partially offset by higher fuel costs

Higher SG&A expenses due mainly to increased selling and mkting expenses in South Europe

Fuel costs rose 37% ($38.6mm), container board dropped 8%, charter rates stable

48% from Company owned farms, 35% from Costa Rica

Bananas are 46% of sales

#3 in Banana, #1 in Pineapples, fragmented mkt share elsewhere

Walmart 12% of sales, top 10 is 32% of sales

Low barriers to entry, distribution and logistics network is competitive advantage

EU has tariffs on Banana import till 2020, might change structure

No material environmental proceedings

Seasonality, 1Q highest margins, 2Q highest revenues

Good labor relations

Currency exposure is hedged

Southern Europe dist and marketing is new and untested

Abu Ghazaleh family owns 34% of shares

$300mm credit facility maturing in 2013 (downsized from $500mm), MGT happy with liquidity

$590mm tax loss carry forwards

No PENSION or OPEB risk

Multiple lawsuits / antitrust pending ($30mm+)

EPA cleanup costs ~$20mm over 10 years

Stock performance relative to Market: -1

Sector Outlook: -1

High commodity prices, minimal pricing controls point towards compressing margins, negative economic outlook for consumer

Cash Flow: 0

Cash flow is relatively stable, working capital has been a source of cash in the past 3 years

		2009	2010	2011
Revenues		$3,496.4	$3,552.9	$3,589.7
COGS		3,185.6	3,280.5	3,270.2
Gross Profit		310.8	272.4	319.5
SG&A		165.8	166.8	190.4
EBIT		145.0	105.6	129.1
D&A		83.7	78.7	73.5
EBITDA		228.7	184.3	202.6
Capex		(84.5)	(70.8)	(79.4)
Interest		(11.9)	(10.8)	(6.8)
Working Capital		27.5	22.3	10.2
Taxes		(18.1)	(3.3)	(11.2)
FCF		141.7	121.7	115.4
CFO		257.5	197.4	195.7
CFI		(66.9)	(50.6)	(74.7)
CFF		(182.2)	(136.7)	(125.7)
Net Income		144.6	60.8	94.8

 

PEG Ratio: 1

P/E			14.25
		2011	2012
EPS		1.56	1.93	23.7%
PEG Ratio			0.60x

 

Valuation: 1

Value Pro shows a 65% upside from the current price of $22.27

 

Following changes were made to Value Pro’s assumptions:

Adjusted FCF for 7 yrs from 10 yrs

Adjusted growth rate to 1.5%

10 yr treasury at 3%

Company interest rate is 1.75%

Equity risk premium assumed at 5%

Beta is taken from finance.yahoo

 

Catalyst: 0

Commodity price stabilization, Consumer confidence and disposable income needs to improve