Tight ship has made headway, but be wary
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