Monday 15 December 2014

Analysis of Fyffes

Fyffes, a tropical fruit distributor

Company: Fyffes

ISIN IE0003295239 | WKN 875263

Business: An Irish importer of tropical fruits. They have four segments: Bananas, Pineapples, Melons and Fruit Snacks. They are working intensively with the entire supply chain from the farms, to the shippers all the way to their won distribution and ripening centres.

Active: In Windward Islands, Belize, Costa Rica, Colombia, Dominican Republic, Guatemala, Ivory Coast, Honduras, Cameroon, Brazil and Peru, Panama and Ecuador are the farm sites and sales are in Europe and the US.

P/E: 16.3

contrarian values of P/E, P/B, ROE as well as dividend for Fyffes

The P/E for Fyffes is too high for me with 16.3 and the P/B also starts to be in the high region with 2.0 and this then gives a no go from Graham. The earnings to sales I find low with only 2% and the ROE is ok but not more with 12%. The book to debt ratio is also ok with 0.9.
In the last five years they have had an excellent yearly revenue growth rate of 8.3%which then gives us a motivated P/E of 19 to 23 which means that they are currently slightly undervalued on the market.
They pay a low dividend of 2.2% which happily only represents 37% of the earnings so they should be able to keep it up.

Conclusion: Graham says no to Fyffes and so do I. The company is today fairly valued since every key figures is in an acceptable range but is nothing spectacular. I am sure that this company will keep jogging along and paying out their low dividends but to be honest I had never even heard about the brand before and that made me both interested to analyse it but it now after looking at the non impressive figures also makes me cautious.

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