Tight ship has made head­way, but be wary

Financial Mail - Investors Monthly - - Analysis -

hodes Food Group offers in­vestors some rich fare, but may not be to the taste of the more value-in­clined pun­ters.

For in­vestors who love an ac­quis­i­tive growth story, Rhodes has gen­er­ated re­ward­ing re­turns since listing in 2014. The share has moved from around R11 at listing in late 2014 to a high of R30 in Oc­to­ber this year.

While there is al­ways ini­tial scep­ti­cism around newly listed com­pa­nies seek­ing ac­quis­i­tive growth, Rhodes — much like phar­ma­ceu­ti­cal con­glom­er­ate As­cendis — has erased mar­ket doubts by de­liv­er­ing good profit per­for­mances backed by cash flows that can sus­tain div­i­dends.

At the time of writ­ing, Rhodes

Rhad just set out its trad­ing up­date for the year to end-Septem­ber (which will be pub­lished by the time this edi­tion of IM is pub­lished).

But the trad­ing up­date, which pen­cils in head­line earn­ings of be­tween 129c/share and 133c/share, is help­ful in terms of as­sess­ing value.

In short, the trad­ing up­date puts Rhodes on a for­ward mul­ti­ple of around 20 times — a rat­ing that de­mands that it con­tinue grow­ing its bot­tom line at a fairly rapid rate.

Rhodes’s more es­tab­lished coun­ter­mates trade at less de­mand­ing earn­ings mul­ti­ples. Tiger sits at around 17.6 times, AVI 18.6 times, Pi­o­neer Foods

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