Total Produce wins ‘very attractive’ rating from Davy Stockbrokers

Dublin stockbroker Davy has placed a “very attractive” rating on the stock of Total Produce, after it issued an interim statement reaffirming its guidance for 2012.

The fresh food company yesterday confirmed that it is sticking to its earlier 7c-8c earnings per share guidance for the remainder of the year. Analysts immediately issued positive responses, with NCB Stockbrokers notably calling the company’s guidance “encouraging” and noting that Total Produce has an estimated €90m in the tank for acquisitions.

Davy Stockbrokers issued a 7.6c per share projection to possible investors in the company, noting that Total Produce’s stock looks a very good option, especially given “the macro backdrop and the well-versed difficulties that retailers across Europe are facing”.

In a note to investors, Davy Stockbrokers stated: “The confirmation of guidance is welcome in a market where companies across a range of sectors are struggling to meet targets. This highlights the defensiveness of the Total Produce model. It has leading positions in core markets across Europe, selling products that consumers demand. Fruit and vegetables remain key selling items for retail, and in recent months we have noted comments by the large UK multiples that it is a category earmarked for investment.

“In markets where investors are struggling to find a safe home for cash, one could do worse than look at Total Produce. It has consistently generated impressive returns over its cost of capital, free cash-flow generation is robust and its dividend is safe and growing, yielding in excess of 4%. In a world where US 10-year yields earn less than 2%, this looks very attractive.”

Meanwhile, NCB said Total Produce’s projections were “very reasonable”. It has restated its buy recommendation on the stock, and put a target price of 55c per share for investors. The share price fluctuated between 44c and 46c on the Irish Stock Exchange yesterday.