Canada And Saudi Arabia Will Capture Protein Demand

Key Takeaways

• Expansion into fast-growing international markets and partnerships with major retailers enhance revenue stability, broaden market reach, and reduce earnings volatility.
  
• Focus on innovation, value-added products, automation, and diversification supports higher margins, operational efficiency, and positions the company for sustainable long-term growth.
  
• Escalating input costs, operational disruptions, heavy investments, evolving consumer habits, and buyer concentration collectively threaten profit margins and earnings stability.

Catalysts

Engages in the food packing business.

• The planned launch of operations in Canada with Walmart (early 2027) and Saudi Arabia with NADEC (H2 2026), both targeting fast-growing markets with rising urbanization and protein consumption, is likely to significantly expand Hilton Food Group's addressable market, driving top-line revenue growth.
  
• Hilton's ongoing innovation in value-added products, including ready-to-cook and premium ranges, aligns with the consumer shift toward convenience-a trend that should sustain or accelerate demand for higher-margin lines, positively impacting earnings and net margins.
  
• Continued investments in automation, supply chain optimization, and digitalization-including strategic moves like the Foods Connected partnership-are anticipated to yield operational efficiencies that support margin expansion and improve ROCE over the longer term.
  
• Strategic partnerships and long-term supply contracts with leading retailers (Tesco, Walmart, Ahold Delhaize) are providing resilience and revenue stability, offering a buffer against short-term market volatility and ensuring steady cash generation for reinvestment and dividends.
  
• Diversification into new proteins (alternative species in seafood, plant-based, and premiumization within traditional meats) and new international markets reduces earnings volatility and positions the company to capitalize on long-term changes in global food consumption, supporting sustainable profit growth.

Hilton Food Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Hilton Food Group's revenue will grow by 3.6% annually over the next 3 years.
• Analysts assume that profit margins will increase from 0.9% today to 1.3% in 3 years time.
• Analysts expect earnings to reach £60.7 million (and earnings per share of £0.66) by about September 2028, up from £38.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting £68 million in earnings, and the most bearish expecting £50.9 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.1x on those 2028 earnings, up from 15.7x today. This future PE is greater than the current PE for the GB Food industry at 15.7x.
• Analysts expect the number of shares outstanding to grow by 0.09% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.82%, as per the Simply Wall St company report.

Hilton Food Group Future Earnings Per Share Growth

Risks

• Inflated raw material prices (particularly for red meat and whitefish) and persistent protein inflation have contributed significantly to recent revenue growth, but ongoing or future input cost volatility may squeeze operating margins and undermine earnings consistency if price pass-through diminishes.
  
• The seafood segment, especially Foppen, is experiencing operational setbacks (FDA import compliance issues, logistics complications, and ongoing non-underlying costs) that hurt profitability; prolonged disruptions or inability to restore normal operations could continue to drag on group net margins and earnings.
  
• Capital expenditure and inventory investments are rising sharply (notably for Canadian expansion), driven by inflation in equipment, labor, and infrastructure. If these projects (Canada, Saudi Arabia) underperform or slow to deliver anticipated returns, there is a risk of overleveraging and ROIC compression, particularly as net debt has increased substantially.
  
• Ongoing consumer behaviors-such as trading down, product switching, and softening demand for higher-priced categories (notably seafood)-combined with structural shifts in protein consumption (towards alternative or plant-based proteins) could erode core meat and fish revenues over time.
  
• Over-reliance on large-scale supermarket contracts (e.g., Tesco, Walmart, Woolworths) exposes the company to margin pressure if these buyers consolidate or renegotiate tougher terms, or if retail consolidation increases their bargaining power, which could compress future net margins and earnings growth.

Valuation

• The analysts have a consensus price target of £10.042 for Hilton Food Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £11.2, and the most bearish reporting a price target of just £7.5.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be £4.6 billion, earnings will come to £60.7 million, and it would be trading on a PE ratio of 18.1x, assuming you use a discount rate of 6.8%.
  
• Given the current share price of £6.79, the analyst price target of £10.04 is 32.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.