Select Harvests (ASX:SHV) Profit Margins Surge to 8%, Reinforcing Bullish Narratives

Select Harvests (ASX:SHV) has reported its latest FY 2025 results, posting second-half revenue of $293.8 million AUD and net income of $3.2 million AUD, with basic EPS of $0.022 per share. For context, the company saw revenue increase from $226.4 million AUD in the same period last year. Net income edged slightly lower from $3.3 million AUD, and EPS slipped from $0.028 AUD. Elevated profit margins in recent reporting periods continue to draw investor attention to the company's underlying earnings quality.

See our full analysis for Select Harvests.

Next up, we will see how these headline numbers mesh with the dominant narratives and expectations that have shaped investor sentiment around Select Harvests recently.

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Profit Margins Surge to 8%

• Net profit margins climbed sharply to 8% for the trailing twelve months, a significant increase from just 0.4% in the prior year, putting Select Harvests' profitability in a much stronger position.
• Consensus narrative spotlights the balance sheet strengthening, especially after a recent capital raise that reduced gearing to 19%, and notes that strategic investments, cost controls, and processing expansion could help sustain these higher margins.
  • Profits generated through Project Management Office initiatives reached $32 million, with further efficiency projects expected to keep costs steady despite inflationary pressure.
  • Anticipated increases in global almond pricing may further support margins, but any yield disappointments or operational hiccups could still impact future profitability.
See how this breakout margin performance ties into analysts' balanced outlook for Select Harvests' growth and valuation prospects. 📊 Read the full Select Harvests Consensus Narrative.

2020% Earnings Growth Faces Slower Outlook

• Earnings surged by 2020% year-on-year to $31.8 million, but analyst forecasts now indicate a more measured annual profit growth rate of 10.2%, compared to the broader Australian market's 12% profit forecast.
• Consensus narrative notes that while the rapid rebound reverses a five-year decline, maintaining this momentum may be challenging as market-wide expectations remain higher.
  • Future revenue guidance is for 5.1% growth per year, compared to the market's 5.9% pace, meaning Select Harvests will need margin durability or new catalysts to remain competitive.
  • There is disagreement among analysts, with projected 2028 earnings ranging from $46.8 million to $68.5 million, highlighting ongoing debate about how long these significant gains can continue.

Valuation Discount Remains Deep

• The current share price of $4.10 trades at a 61% discount to Select Harvests' DCF fair value of $10.60, and it is also 24% below the analyst price target of $5.42.
• Consensus narrative indicates this steep discount heavily supports the bullish thesis, given the company trades at a lower PE ratio (18.6x) than its peer group (19.6x) and analysts expect 28.8% upside to their $5.42 target.
  • This valuation gap brings attention to whether strong recent profitability can overcome sector-wide growth constraints and execution risks identified by covering analysts.
  • With no flagged risks in the review period, positive margin trends and discounted valuation position Select Harvests as a potential recovery play for value-focused investors.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Select Harvests on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Select Harvests.

See What Else Is Out There

Despite its impressive margin rebound, Select Harvests faces slower projected earnings growth and lags broader market expectations for future profit expansion.

If you want more reliable growth potential, check out high growth potential stocks screener (48 results) for established companies anticipated to outperform with stronger earnings trends ahead.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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