Suntory Beverage & Food (TSE:2587): Evaluating Valuation After French Production Closure and Restructuring Plans

Suntory Beverage & Food (TSE:2587) is closing its La Courneuve production facility in France as part of a broader restructuring plan. The decision follows several years of sales decline and is intended to improve operational efficiency.

See our latest analysis for Suntory Beverage & Food.

Shares of Suntory Beverage & Food have shown some short-term momentum, up 5.6% over the past three months, even as restructuring in France and fresh sustainability initiatives have kept the company in the headlines. Still, with a one-year total shareholder return of -7.8%, long-term performance has been muted. This suggests investors remain cautious about growth prospects and profitability turning the corner.

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With shares still trading well below analyst price targets and a lingering discount to intrinsic value, is Suntory Beverage & Food quietly offering value to patient investors, or is the market already factoring in its next chapter?

Price-to-Earnings of 16.5x: Is it justified?

At a closing price of ¥4,717 and a price-to-earnings (P/E) ratio of 16.5x, Suntory Beverage & Food is trading below the peer and industry averages, which points to an undervalued position relative to its earnings profile.

The P/E ratio measures how much investors are willing to pay for a company's earnings and is widely used to gauge value, especially for established consumer staples like beverages. For Suntory, a lower P/E compared to similar companies could indicate the market is not fully pricing in future profit potential.

Importantly, 16.5x is not only below the Asian Beverage industry average of 19.3x, but also below the peer group average of 26.4x. Regression-based valuation suggests a fair P/E ratio closer to 22.3x, which means Suntory's shares may have room to re-rate toward that multiple as the company's performance stabilizes and long-term strategies are implemented.

Explore the SWS fair ratio for Suntory Beverage & Food

Result: Price-to-Earnings of 16.5x (UNDERVALUED)

However, ongoing restructuring costs and slower revenue growth could limit near-term upside. This makes it crucial for investors to monitor execution closely.

Find out about the key risks to this Suntory Beverage & Food narrative.

Another View: What Does Discounted Cash Flow Say?

Looking at things through our DCF model, Suntory Beverage & Food stands out as deeply undervalued, with shares trading at a significant discount to its estimated fair value. This presents a sharp contrast to what simple earnings multiples are suggesting. Could this gap signal limited downside, or does it hide risks in the outlook?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Suntory Beverage & Food for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Suntory Beverage & Food Narrative

If you think there’s another side to the story, or want to dive into the data yourself, you can shape your own narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Suntory Beverage & Food.

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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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