Fins­bury Food’s a tasty stock

Celebration cake-to-free from bread maker is cop­ing well with challenging mar­ket

Shares - - CONTENTS -

Ashare price pull­back at di­ver­si­fied bak­ery group Fins­bury Food (FIF:AIM) rep­re­sents a buy­ing op­por­tu­nity ahead of full year re­sults (18 Sep). Re­as­sur­ing com­men­tary de­spite trad­ing amid tough in­dus­try con­di­tions and po­ten­tial for up­dates on new li­cense and cus­tomer wins or even fur­ther ac­qui­si­tions, are among the rea­sons to swoop at 109p.

Celebration cakes, ar­ti­san breads and muffins maker Fins­bury Food faces a tough con­sumer mar­ket and ris­ing in­put costs, but re­mains con­fi­dent in its abil­ity to main­tain a mar­ket lead­ing po­si­tion and de­liver prof­itable growth.

Shares ad­mires Fins­bury Food’s di­ver­si­fi­ca­tion across the re­tail and ‘out of home eat­ing’ food­ser­vice chan­nels, as well as CEO John Duffy’s un­wa­ver­ing fo­cus on prod­uct in­no­va­tion, pro­duc­tiv­ity gains and im­prov­ing share­holder value. One ex­am­ple is the tough de­ci­sion taken to close (23 Aug) Grain D’Or, Fins­bury’s his­tor­i­cally loss-mak­ing, Lon­don-based maker of pre­mium baked goods for the UK pas­try sec­tor, in a move that re­moves a dis­trac­tion and will im­prove group earn­ings qual­ity.

Ahead of the re­sults, Pan­mure Gor­don’s Peter Smed­ley fore­casts im­proved pre-tax profit of £17.1m (2016: £16.5m) for earn­ings of 9.9p (2016: 9.7p), ris­ing to £17.7m and 10.2p re­spec­tively in 2018. On the lat­ter es­ti­mates, Fins­bury trades on 10.7 times prospec­tive earn­ings, a rat­ing which ap­pears overly gloomy, while Fins­bury of­fers a near-3% yield based on next year’s 3.2p div­i­dend fore­cast. We also note sig­nif­i­cant 38% up­side to­wards Smed­ley’s 150p tar­get price.

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