LSE:ABF

Stock Analysis Report

Executive Summary

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

Rewards

Trading at 14.2% below its fair value

Earnings are forecast to grow 12.8% per year

Pays a reliable dividend of 1.81%

Risk Analysis

No risks detected for ABF from our risk checks.


Snowflake Analysis

Flawless balance sheet average 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

1.5%

ABF

1.9%

GB Food

1.4%

GB Market


1 Year Return

13.1%

ABF

11.2%

GB Food

12.4%

GB Market

Return vs Industry: ABF exceeded the UK Food industry which returned 11.3% over the past year.

Return vs Market: ABF matched the UK Market which returned 13.1% over the past year.


Shareholder returns

ABFIndustryMarket
7 Day1.5%1.9%1.4%
30 Day2.7%2.7%1.8%
90 Day19.7%15.6%8.8%
1 Year15.3%13.1%13.9%11.2%18.3%12.4%
3 Year11.1%5.5%13.5%6.1%23.8%8.0%
5 Year-6.8%-13.6%6.3%-4.2%41.8%8.9%

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?

11.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ABF (£25.61) is trading below our estimate of fair value (£29.86)

Significantly Below Fair Value: ABF is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: ABF is poor value based on its PE Ratio (23.1x) compared to the Food industry average (16.6x).

PE vs Market: ABF is poor value based on its PE Ratio (23.1x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: ABF is poor value based on its PEG Ratio (1.8x)


Price to Book Ratio

PB vs Industry: ABF is overvalued based on its PB Ratio (2.1x) 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 19 analysts?

12.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ABF's forecast earnings growth (12.8% per year) is above the savings rate (0.5%).

Earnings vs Market: ABF's earnings (12.8% per year) are forecast to grow faster than the UK market (11.7% 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 (3.6% 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 (11.9%).


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 (31x 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?

1.74%

Current Dividend Yield


Dividend Yield vs Market

company1.7%marketbottom25%1.8%markettop25%5.0%industryaverage2.3%forecastin3Years2.0%

Current dividend yield vs market & industry

Notable Dividend: ABF's dividend (1.81%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: ABF's dividend (1.81%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


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 (34.1% payout ratio).


Next Steps

Management

What is the CEO of Associated British Foods's salary, the management and board of directors tenure and is there insider trading?

14.4yrs

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 ($USD5.39M) is about average for companies of similar size in the UK market ($USD4.48M).

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


Management Age and Tenure

14.4yrs

Average Tenure

56.5yo

Average Age

Experienced Management: ABF's management team is seasoned and experienced (14.4 years average tenure).


Board Age and Tenure

3.8yrs

Average Tenure

62yo

Average Age

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


Insider Trading

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


Recent Insider Transactions

BuyUK£49,65111 Sep 19
Linda Cairnie
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares2,223
Max PriceUK£22.36
BuyUK£67,50001 Mar 19
Graham Allan
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares3,000
Max PriceUK£22.50

Ownership Breakdown

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


Management Team

  • John Bason (61yo)

    Finance Director & Executive Director

    • Compensation: UK£2.83m
  • Paul Marchant

    Chief Executive Officer of Primark/Penneys

    • Tenure: 10.2yrs
  • George Weston (55yo)

    CEO & Executive Director

    • Tenure: 14.8yrs
    • Compensation: UK£4.15m
  • Paul Lister (55yo)

    Company Secretary

    • Flic Howard-Allen (58yo)

      Head of External Affairs

      • Des Pullen

        Group Human Resources Director

        • Tenure: 14yrs
      • Julie Withnall

        Group Head of Reward


        Board Members

        • John Bason (61yo)

          Finance Director & Executive Director

          • Compensation: UK£2.83m
        • Michael George McLintock (57yo)

          Independent Chairman

          • Tenure: 1.8yrs
          • Compensation: UK£409.00k
        • George Weston (55yo)

          CEO & Executive Director

          • Tenure: 14.8yrs
          • Compensation: UK£4.15m
        • Wolfhart Hauser (70yo)

          Independent Non-Executive Director

          • Tenure: 5yrs
          • Compensation: UK£74.00k
        • Graham Allan (64yo)

          Independent Non-Executive Director

          • Tenure: 1.3yrs
          • Compensation: UK£74.00k
        • Richard Reid (63yo)

          Independent Non-Executive Director

          • Tenure: 3.8yrs
          • Compensation: UK£111.00k
        • Linda Cairnie (65yo)

          Senior Independent Director

          • Tenure: 1.1yrs
          • Compensation: UK£111.00k
        • Emma Adamo (56yo)

          Non-Executive Director

          • Tenure: 8.1yrs
          • Compensation: UK£74.00k

        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£20.985b
        • 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 EACH CNV INTO 1 ORD GBP0.0568USUSDJun 1992
        AFO2DB (Deutsche Boerse AG)ADR EACH CNV INTO 1 ORD GBP0.0568DEEURJun 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 Analysis2020/01/19 20:38
        End of Day Share Price2020/01/17 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.