Stock research on global mid-cap companies

Evaluate Research

Evaluate Research provides institutional quality stock research on small-cap and  mid-cap companies on a global basis, thus helping connect investors with the company.

At Evaluate Research, we provide free of cost to all investors a 20-25 page Initiation Report which evaluates in great detail all aspects of the company:  growth opportunities, catalysts, business description, competitive positioning, SWOT analysis, risks, etc.  In addition, we determine specific price targets for the company based on detailed 5-year complete forecasts of financial statements including IS, BS, CF, ratios, etc.  Finally, whereas many sell-side brokers offer sketchy and irregular ongoing maintenance research of companies, if not outright dropped or termination of coverage, at Evaluate Research we systematically monitor and regularly publish Update Notes covering quarterly earnings, major corporate events, etc.

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Stock research on global mid-cap companies, Evaluate Research

Equity Bottom-Up

Fresh Del Monte Produce / Equity Bottom-Up

<p>Fresh Del Monte [FDP_US] reported strong results for the second quarter [ended June], where the bottom-line was 29% above our expectations. The company reported record EPS of $1.75 in the second quarter, registering a growth of +48% as compared with the second quarter of last year. This is the highest quarterly EPS in the last 10 years mainly buoyed by margin expansion. When we spoke with management [CFO Richard Contreras], they noted that their fresh-cut fruits and the avocado business will continue to drive revenue growth going forward.</p>
<p>Following a robust set of results, we are increasing our one-year price target to $66.60 from $50.00 which represents +9% total returns from current levels. Our price target is based on the average of DCF and P/E methodologies. Our DCF based price is $63.00 which assumes 7.2% WACC and 2.5% terminal growth rate. We apply an 18.0x P/E on our FY2017 EPS estimate of $3.90 which comes to $70.20 per share. See DCF details further in the report. At present the shares of FDP are trading at 15.4x on FY01/2017 EPS estimate which is at a 15% discount to its five year P/E of 18.1x and 25% discount to its industry P/E of 20.5x. Given the limited upside potential we remain neutral on the stock. Our target P/E multiple of 18.0x is at a discount to the sector average given the volatile nature of FDP’s earnings.</p>

Fresh Del Monte [FDP_US] reported strong results for the second quarter [ended June], where the bottom-line was 29% above our expectations. The company reported record EPS of $1.75 in the second quarter, registering a growth of +48% as compared with the second quarter of last year. This is the highest quarterly EPS in the last 10 years mainly buoyed by margin expansion. When we spoke with management [CFO Richard Contreras], they noted that their fresh-cut fruits and the avocado business will continue to drive revenue growth going forward.
Following a robust set of results, we are increasing our one-year price target to $66.60 from $50.00 which represents +9% total returns from current levels. Our price target is based on the average of DCF and P/E methodologies. Our DCF based price is $63.00 which assumes 7.2% WACC and 2.5% terminal growth rate. We apply an 18.0x P/E on our FY2017 EPS estimate of $3.90 which comes to $70.20 per share. See DCF details further in the report. At present the shares of FDP are trading at 15.4x on FY01/2017 EPS estimate which is at a 15% discount to its five year P/E of 18.1x and 25% discount to its industry P/E of 20.5x. Given the limited upside potential we remain neutral on the stock. Our target P/E multiple of 18.0x is at a discount to the sector average given the volatile nature of FDP’s earnings.

Fresh Del Monte Produce: 2QFY2016 Earnings Update