LSE:ABF

Stock Analysis Report

Executive Summary

Associated British Foods plc operates as a diversified food, ingredients, and retail company worldwide.

Rewards

Trading at 21% below its fair value

Earnings are forecast to grow 12.54% per year

Pays a high and reliable dividend of 1.79%

Risk Analysis

No risks detected for ABF from our risk checks.


Snowflake Analysis

Flawless balance sheet established dividend payer.


Similar Companies

Share Price & News

How has Associated British Foods's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: ABF has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-3.2%

ABF

-2.2%

GB Food

0.2%

GB Market


1 Year Return

11.7%

ABF

8.1%

GB Food

6.4%

GB Market

Return vs Industry: ABF exceeded the UK Food industry which returned 9.5% over the past year.

Return vs Market: ABF exceeded the UK Market which returned 7.1% over the past year.


Shareholder returns

ABFIndustryMarket
7 Day-3.2%-2.2%0.2%
30 Day-3.3%-1.9%-1.4%
90 Day2.5%3.9%3.8%
1 Year13.8%11.7%10.8%8.1%11.9%6.4%
3 Year4.2%-1.1%7.2%0.2%18.6%3.8%
5 Year-10.8%-17.3%1.8%-8.2%34.8%4.0%

Price Volatility Vs. Market

How volatile is Associated British Foods's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Associated British Foods undervalued compared to its fair value and its price relative to the market?

21.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ABF (£25.83) is trading below our estimate of fair value (£32.68)

Significantly Below Fair Value: ABF is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: ABF is poor value based on its PE Ratio (23.2x) compared to the Food industry average (16.9x).

PE vs Market: ABF is poor value based on its PE Ratio (23.2x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: ABF is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: ABF is overvalued based on its PB Ratio (2.2x) compared to the GB Food industry average (1.2x).


Next Steps

Future Growth

How is Associated British Foods forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

12.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ABF's forecast earnings growth (12.5% per year) is above the savings rate (0.5%).

Earnings vs Market: ABF's earnings (12.5% per year) are forecast to grow slower than the UK market (13% per year).

High Growth Earnings: ABF's earnings are forecast to grow, but not significantly.

Revenue vs Market: ABF's revenue (3.8% per year) is forecast to grow faster than the UK market (3.5% per year).

High Growth Revenue: ABF's revenue (3.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ABF's Return on Equity is forecast to be low in 3 years time (11.7%).


Next Steps

Past Performance

How has Associated British Foods performed over the past 5 years?

10.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ABF has high quality earnings.

Growing Profit Margin: ABF's current net profit margins (5.5%) are lower than last year (6.5%).


Past Earnings Growth Analysis

Earnings Trend: ABF's earnings have grown by 10.4% per year over the past 5 years.

Accelerating Growth: ABF's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: ABF had negative earnings growth (-12.8%) over the past year, making it difficult to compare to the Food industry average (8.5%).


Return on Equity

High ROE: ABF's Return on Equity (9.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Associated British Foods's financial position?


Financial Position Analysis

Short Term Liabilities: ABF's short term assets (£5.6B) exceed its short term liabilities (£3.1B).

Long Term Liabilities: ABF's short term assets (£5.6B) exceed its long term liabilities (£1.1B).


Debt to Equity History and Analysis

Debt Level: ABF's debt to equity ratio (6%) is considered satisfactory.

Reducing Debt: ABF's debt to equity ratio has reduced from 14.2% to 6% over the past 5 years.

Debt Coverage: ABF's debt is well covered by operating cash flow (262.9%).

Interest Coverage: ABF's interest payments on its debt are well covered by EBIT (49.1x coverage).


Balance Sheet

Inventory Level: ABF has a high level of physical assets or inventory.

Debt Coverage by Assets: ABF's debt is covered by short term assets (assets are 9.7x debt).


Next Steps

Dividend

What is Associated British Foods's current dividend yield, its reliability and sustainability?

1.79%

Current Dividend Yield


Dividend Yield vs Market

company1.8%marketbottom25%1.8%markettop25%5.1%industryaverage2.4%forecastin3Years2.1%

Current dividend yield vs market & industry

Notable Dividend: ABF's dividend (1.79%) is higher than the bottom 25% of dividend payers in the UK market (1.79%).

High Dividend: ABF's dividend (1.79%) is low compared to the top 25% of dividend payers in the UK market (5.09%).


Stability and Growth of Payments

Stable Dividend: ABF's dividends per share have been stable in the past 10 years.

Growing Dividend: ABF's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (41.7%), ABF's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: ABF's dividends in 3 years are forecast to be well covered by earnings (34.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

14.5yrs

Average management tenure


CEO

George Weston (55yo)

14.8yrs

Tenure

UK£4,146,000

Compensation

Mr. George Garfield Weston has been the Chief Executive Officer of Associated British Foods plc since April 1, 2005. Mr. Weston has been the Chief Executive officer of Weston Foods Ltd., a holding Company  ...


CEO Compensation Analysis

Compensation vs Market: George's total compensation ($USD5.38M) is about average for companies of similar size in the UK market ($USD4.68M).

Compensation vs Earnings: George's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
George Weston
CEO & Executive Director 14.8yrsUK£4.15m0.46% £96.0m
John Bason
Finance Director & Executive Director0yrsUK£2.83m0.023% £4.8m
Des Pullen
Group Human Resources Director14.1yrsno datano data
Flic Howard-Allen
Head of External Affairs0yrsno datano data
Julie Withnall
Group Head of Reward0yrsno datano data
Paul Lister
Company Secretary0yrsno datano data
Paul Marchant
Chief Executive Officer of Primark/Penneys10.3yrsno datano data

14.5yrs

Average Tenure

56.5yo

Average Age

Experienced Management: ABF's management team is seasoned and experienced (14.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
George Weston
CEO & Executive Director 14.8yrsUK£4.15m0.46% £96.0m
John Bason
Finance Director & Executive Director0yrsUK£2.83m0.023% £4.8m
Michael George McLintock
Independent Chairman1.8yrsUK£409.00k0.0019% £394.8k
Wolfhart Hauser
Independent Non-Executive Director5.1yrsUK£74.00k0.00050% £103.9k
Graham Allan
Independent Non-Executive Director1.4yrsUK£74.00k0.00038% £79.0k
Richard Reid
Independent Non-Executive Director3.8yrsUK£111.00k0.00042% £87.3k
Linda Cairnie
Senior Independent Director1.2yrsUK£111.00k0.00066% £137.1k
Emma Adamo
Non-Executive Director8.2yrsUK£74.00k0.064% £13.3m

3.8yrs

Average Tenure

62yo

Average Age

Experienced Board: ABF's board of directors are considered experienced (3.8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Associated British Foods plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Associated British Foods plc
  • Ticker: ABF
  • Exchange: LSE
  • Founded: 1935
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: UK£20.779b
  • Shares outstanding: 788.89m
  • Website: https://www.abf.co.uk

Number of Employees


Location

  • Associated British Foods plc
  • Weston Centre
  • 10 Grosvenor Street
  • London
  • Greater London
  • W1K 4QY
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ASBF.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1980
ABFLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1980
AFO1DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1980
ABFLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1980
ABFSWX (SIX Swiss Exchange)YesOrdinary SharesCHCHFJan 1980
ASBF.YOTCPK (Pink Sheets LLC)ADR NEWUSUSDJun 1992
AFO2DB (Deutsche Boerse AG)ADR NEWDEEURJun 1992

Biography

Associated British Foods plc operates as a diversified food, ingredients, and retail company worldwide. It operates through five segments: Grocery, Sugar, Agriculture, Ingredients, and Retail. The Grocery segment manufactures and sells grocery products, including hot beverages, sugar and sweeteners, vegetable oils, balsamic vinegars, bread and baked goods, cereals, ethnic foods, and meat products to retail, wholesale, and foodservice businesses. The Sugar segment is involved in growing, processing, and sale of sugar beet and sugar cane to industrial users. The Agriculture segment manufactures and sells animal feeds; and provides other products and services for the agriculture sector. The Ingredients segment manufactures bakers’ yeast, bakery ingredients, enzymes, lipids, yeast extracts, and cereal specialties. The Retail segment is involved in buying and merchandising clothing and accessories through the Primark and Penneys retail chains, which offer womenswear, lingerie, children’s wear, menswear, footwear, accessories, hosiery, beauty, and homeware. The company was founded in 1935 and is headquartered in London, the United Kingdom. Associated British Foods plc is a subsidiary of Wittington Investments Limited. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/21 20:53
End of Day Share Price2020/02/21 00:00
Earnings2019/09/14
Annual Earnings2019/09/14


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.