Glanbia Plc – Value Analysis (LONDON:GLB) : October 6, 2017

Capitalcube gives Glanbia Plc a score of 66.

Our analysis is based on comparing Glanbia Plc with the following peers – Dairy Crest Group plc, Kri-Kri Milk Industry SA and Ukrproduct Group Ltd (DCG-GB, KRI-GR and UKR-GB).

Investment Outlook

Glanbia Plc has a fundamental score of 66 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It currently trades at a Price/Book ratio of (3.92).
  • The market expects GLB-GB to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • GLB-GB‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • Over the last five years, GLB-GB‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s relatively low gross margin and median pre-tax margin suggest operations may be constrained on pricing versus peers.
  • While GLB-GB‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • GLB-GB has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

GLB-GB has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 15.42% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 21.50%), and a well-cushioned interest coverage level of 9.42x, GLB-GB can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 3 peers for the company have an outstanding debt balance.

GLB-GB has maintained its Quick & Able profile from the prior year-end.

  • GLB-GB‘s interest coverage is similar to last year’s high of 9.52x, which compares to the 2014 low of 6.69x.
  • Compared to 2015, interest coverage has remained relatively stable for both the company (9.42x) and the peer median (7.69x).
  • GLB-GB‘s debt-EV is similar to its four-year average debt-EV of 15.73%.
  • While its debt-EV increased to 15.42% from 14.21% (in 2015), its peer median decreased during this period to 21.50% from 24.02%.
  • Relative to peers, debt-EV rose 3.73 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Dairy Crest Group plc 27.58 2.16 5.96 8.43
Kri-Kri Milk Industry SA 11.5 2.14 26.58 117.93
Ukrproduct Group Ltd 82.58 0.48 -0.27 2.45
Glanbia Plc 15.42 1.8 9.42 41.24
Peer Median 21.5 1.97 7.69 24.83
Best In Class 11.5 2.16 26.58 117.93

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Company Profile

Glanbia Plc engages in the manufacture and distribution of dairy and nutritional ingredients. It operates through the following segments: Glanbia Performance Nutrition, Glanbia Nutritionals, Dairy Ireland, and Joint Ventures and Associates. The Glanbia Performance Nutrition segment comprises of performance nutrition products under the Optimum Nutrition, BSN, Isopure, Nutramino, and ABB brands. The Glanbia Nutritionals segment manufactures and sells cheese, dairy, and non-dairy nutritional ingredients and vitamin and mineral premixes. The Dairy Ireland segment consists of consumer products and agribusiness. The Joint Ventures and Associates segment covers Glanbia Ingredients Ireland, Glanbia Cheese, and Southwest Cheese. The company was founded in 1997 and is headquartered in Kilkenny, Ireland.

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