Monday, March 12, 2018

Analysis of ABF 2018


ABF, logo, 2018

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: 17.04

Here you can find the previous analysis of ABF 2017

Contrarian analysis of ABF with P/E, P/B, ROE and dividends 2018

The P/E of ABF is still very high but starts to be more reasonable at 17 and the P&B is down at 2.5 which is on the same line as for the P/E however Graham would still not go for the company.
The earnings to sales have improved significantly and are now up at 8% and the ROE is up at 14.5%. The book to debt ratio is good up at a ratio of 1.9.
Th yearly revenue growth rate has increased slightly and is up at 2.9% which gives us a motivated P/E of around 12 to 14 which means that ABF is still slightly overvalued by the market today however is has been a long time since they was this close to a more proper valuation.
The dividends are still silly with only 1.6% which happily correspond to less that 30% of their profits so there is room for improvement.

Conclusion: Graham always said no to this investment and he still does. I realise that I should have taken the money and walked away when they were traded over 50 € per share but since it is impossible to turn back time I just have to suck it up. To be fair ABF start to look like a better investment today than what it ever was however a large part of the profit came from successful sale of business which means that it is not a consistent growth earnings increase and we might expect a decrease during 2018 in earnings if not in revenue. I will not invest more into ABF but I will remain as a shareholder with the long term target of making an IPO of Primark at some point in time.

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