Warehouse Automation And Global Diversification Will Secure Resilience

Key Takeaways

• Expansion in premium consumer goods and travel retail, alongside diversification, reduces risk and provides stable, diversified revenue streams.
  
• Investments in automation, digital integration, and operational streamlining are set to improve efficiency, margins, and long-term profitability.
  
• Rising costs, regulatory pressures, and increased competition threaten profitability, market share, and expose the company to heightened volatility and riskier growth prospects.

Catalysts

Distributes consumer goods worldwide.

• Expansion and growing demand in premium consumer goods and travel retail-driven by increasing global affluence, middle-class growth, and strong post-pandemic travel recovery-position B&S to benefit from sustained revenue growth, as evidenced by robust sales in Beauty, Personal Care, Duty Free, Maritime, and Food segments.
  
• Continued investments in warehouse automation and digital integration (robotization in the U.S., new warehouse construction) are expected to deliver operational efficiency improvements and cost savings, positively impacting future net margins as temporary transition costs subside.
  
• Streamlined operations and working capital improvements-including divestment of low-profit and nonstrategic businesses-are enhancing profitability and return on invested capital, laying the groundwork for more stable earnings and margin expansion.
  
• Diversification across segments and expanding into new business lines and geographies (e.g., acquisitive growth in Tastemakers, government/defense contracts, focus on cruise businesses) reduces geographic and segment concentration risk and supports more stable, diversified revenue streams.
  
• B&S's ability to adapt quickly to changing regulatory and supply chain environments-supported by recent governance, compliance, and sustainability efforts-raises barriers to entry and strengthens long-term business resilience, supporting both revenue stability and future profit growth.

B&S Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming B&S Group's revenue will grow by 5.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.7% today to 2.7% in 3 years time.
• Analysts expect earnings to reach €77.1 million (and earnings per share of €0.92) by about August 2028, up from €39.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 9.2x on those 2028 earnings, down from 12.4x today. This future PE is lower than the current PE for the NL Retail Distributors industry at 12.5x.
• Analysts expect the number of shares outstanding to grow by 1.79% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.33%, as per the Simply Wall St company report.

B&S Group Future Earnings Per Share Growth

Risks

• B&S Group faces persistent margin pressure, as evidenced by the decline in EBITDA margin from 5.1% to 4.4% and continued gross profit compression due to geopolitical tensions, import tariffs, and increased staff costs; if these trends persist or intensify, net margins and earnings will be structurally impacted.
  
• Ongoing increases in operating and staff costs, including those driven by warehouse automation and higher temporary labor needs, suggest rising cost pressures are outpacing turnover growth, risking further deterioration in profitability and return on capital.
  
• The divestment of nonstrategic businesses (Liquor, Health segment) and closure of underperforming retail shops, while intended to streamline operations, may also reduce revenue diversification and expose B&S Group to greater volatility from its remaining core segments, putting top-line growth at risk if any core segment underperforms.
  
• Intensifying global regulatory scrutiny around import tariffs, cross-border operations, and sustainability reporting (CSRD), as indicated by the company's uncertainty about evolving legislation, could result in higher long-term compliance costs or even restrict market access, directly pressuring net profits and limiting growth opportunities.
  
• The ongoing threat posed by larger, more efficient e-commerce and distribution competitors, coupled with continued sector consolidation and manufacturers' shift to direct-to-consumer models, increases the risk that B&S Group could lose key customers or market share, leading to slower revenue growth and potentially lower earnings over time.

Valuation

• The analysts have a consensus price target of €6.7 for B&S Group based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €2.8 billion, earnings will come to €77.1 million, and it would be trading on a PE ratio of 9.2x, assuming you use a discount rate of 6.3%.
  
• Given the current share price of €5.9, the analyst price target of €6.7 is 11.9% 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.