Sunday 12 February 2017

Analysis of ABF 2017

ABF, logo, 2017

Company: ABF

ISIN GB0006731235 | WKN 920876 

Business: A British conglomerate with agriculture, agricultural products as well as retail. Currently they have five business segments: Sugar, Agriculture, Retail, Grocery and Ingredients. To find out more about their grocery brands then please click here and to find out about their businesses in general then please click here.

Active: Europe, Africa, USA and Australia. Heaviest in the UK and Ireland.

P/E: 24.1

Here you can find the previous analysis of ABF 2015

analytical data, 2017, ABF

Since the last analysis the share price have dropped by over -30% which means that the P/E is at a more reasonable level today with its 24.1 however this is still a high value. The P/B have also improved significantly and is now at 2.8 which still gives a very clear no go from Graham. And I realise while writing this how insane it was of me not to sell ABF when it was up at a P/E of over 50.
The earnings to sales have improved slightly and is now at 6% as has the ROE that is up at 11.6. It is still not good but it is ok. The book to debt ratio is great with 1.7.
The yearly revenue growth rate is at a low 1.8% so more or less inflation considering their global presence. From this we get a motivated P/E of 10 to 13 which means that ABF is overvalued on the market today.
The pay a silly dividend of 1.5% however it only corresponds to 36% of their earnings so they should be able to keep it up for a while.

Conclusion: Graham has always said no to this one. I, on the other hand, decided not that long ago to increase my position in ABF. The P/E is down as a more reasonable level, the P/B is ok, the ROE will hopefully keep improving and more importantly for me Primark keep increasing the store area and sales. I will continue as a shareholder in ABF.

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