Greencore profits could jump to €48.2m
Davy's respected food sector analyst, John O'Reilly reckons Greencore shares are value for money in an equity note circulated to the broker's clients before the weekend. Mr O'Reilly said Davy's think Greencore is well on the way to resuming earnings growth to the medium term, adding that the brokers believe Greencore already has some good propositions in British food manufacturing with leading and strong relative market positions in fast growing categories. Mr O'Reilly says the group has the potential to grow earnings by 10% per year and that the ultimate success from the Hazlewood acquisition, and the learning involved in assimilating and restructuring this, will better equip Greencore in its future development, especially in large-scale acquisitions.
"This is not to suggest that long term growth must be uniquely acquisition driven. Pioneering and dominating new categories was a Hazlewood competence, even though this may have been difficult to appreciate because of the wide scope and poor performance of its operations overall," he said. "we think Greencore shares at 8.6 times forecast earnings for this year and yielding 5% are value for money," he told clients. Mr O'Reilly said emerging from Greencore's recent results presentation came the realisation that like-for-like operating profit growth can be raised to 8%.
