ForFarmers NV – Value Analysis (EURONEXT AMSTERDAM:FFARM) : December 19, 2017

Capitalcube gives ForFarmers NV a score of 75.

Our analysis is based on comparing ForFarmers NV with the following peers – Sharkia National Food, Walcom Group Ltd., Wynnstay Group plc and Persefs SA (SNFC-EG, WALG-GB, WYN-GB and PERS-GR).

Investment Outlook

ForFarmers NV has a fundamental score of 75 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It currently trades at a Price/Book ratio of (2.73).
  • FFARM-NL outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • FFARM-NL has a successful operating model with relatively high net profit margins and asset turns.
  • Changes in annual earnings are in line with its chosen peers but lags in terms of revenue, implying the company is cost conscious and selective about spending for growth.
  • FFARM-NL‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While FFARM-NL‘s revenues have increased slower than peer median, the market currently gives the company a higher than peer median P/E ratio and may be factoring in some sort of a strategic play.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • FFARM-NL has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

FFARM-NL has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 10.99% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 10.99%), and a well-cushioned interest coverage level of 15.42x, FFARM-NL can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include SNFC-EG.

FFARM-NL has maintained its Quick & Able profile from the prior year-end.

  • FFARM-NL‘s interest coverage is similar to last year’s high of 15.61x, which compares to the 2013 low of 5.44x.
  • Though its interest coverage has remained relatively stable at 15.42x compared to 2015, its peer median has decreased to 11.38x from 15.61x during this period.
  • Interest coverage rose 4.04 points relative to peers.
  • FFARM-NL‘s debt-EV is its highest over the last four years and compares to a low of -287.48% in 2014.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Sharkia National Food 0 14.86 0 999
Walcom Group Ltd. 33.28 2.13 7.34 -9.65
Wynnstay Group plc 6.24 1.86 37.03 121.38
Persefs SA 102.46 4.02 1.55 -0.8
ForFarmers NV 10.99 1.76 15.42 77.64
Peer Median 10.99 2.13 11.38 77.64
Best In Class 6.24 14.86 37.03 999

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Company Profile

ForFarmers NV is an operating feed company, which engages in the production and supply of animal feed and grain products. The firm operates through the following segments: the Netherlands, Germany or Belgium, and United Kingdom. Its offers feed production, logistics, and provision of Total Feed solutions. The company is headquartered in Lochem, the Netherlands.

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