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Writer's pictureMark Watson-Mitchell

Greencore Group – Shares Up 73% In Six Months, Getting An Even Better Taste, Ups Market Guidance, Now Looking For 200p/225p Range Plus

The Trading Update issued by the Greencore Group (LON:GNC) yesterday showed continued strong momentum in the convenience foods maker’s final quarter of its year.


As well as upping its market guidance, it was positive enough in its content to see its shares close up nearly 9% better at 196p.


And I believe that there is even more upside to go for.


The Business


As one of the leading manufacturers of convenience foods in the UK, it supplies all of the major supermarkets in the UK, as well as supplying convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers.


The Dublin-based Greencore Group has strong market positions in a range of categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings.


CEO Dalton Philips stated that:


"The Greencore team delivered an outstanding performance with our FY24 results now expected to exceed current market expectations.


Providing high-quality, fresh and healthy food to our customers every day is at the heart of what we do.


As we enter the new financial year, our focus remains on making really great food, rebuilding our profitability, and positioning Greencore to be the UK's leading convenience foods manufacturer.


We'll share more detail at our FY24 results in early December and will use our Capital Markets Day in early 2025 (5th February) to outline our medium-term growth strategy."


The Trading Update


Ahead of publishing its Final Results on Tuesday 3rd December, the group stated that its like-for-like revenue growth for Q4 was up 3.7% year-on-year driving the year’s revenue growth up 3.4%.


The group guided the market that it expects to report FY24 revenue of around £1.8bn.


“Q4 LFL volume performance was encouraging given some of the seasonal factors encountered, with almost all categories experiencing some LFL volume growth.


Profit conversion during Q4 was ahead of our expectation and the Group now anticipates FY24 Adjusted Operating Profit will be ahead of current market expectations and in a range of £95m-£97m.


This was as a result of continued strong focus on improving returns across our portfolio, other commercial initiatives and enhancing operational efficiency for key areas, such as labour and waste, across our network.”


Analyst Views


Sector analysts Clive Black and Darren Shirley, at Shore Capital Markets, raised their estimates on the group, by 5% for the 2024 year and by 6% for the current year.


They state that they are:


“most excited by what management may speak to the medium-term direction of the Group; with the change programme costs in tow.


Ongoing, such delivery implies further earnings progress, a new dividend policy to come and maybe some ideas to build the business too.


There could be a lot to like, which should also support and maybe further expand its rating.


Pleasing stuff.”


Their estimates for the end-September 2024 year are now for revenues of £1,799m (£1,914m), with adjusted pre-tax profits of £74.0m (£55.5m), lifting earnings to 11.6p (8.9p) and paying a 3.9p (nil) dividend for the year.


For the current 2025 year they see £1,835m sales, £78.5m profits, 12.6p earnings and a 4.2p per share dividend.


The duo has figures for 2026 showing £1,873m revenues, £85.0m profits, 13.7p earnings and a 4.6p dividend.


In My View


In late March this year, I considered that this group was a real generator of value, and at 112.90p, that its shares were under-rated and offered a bargain to new investors.


In late July, I commented that this group’s shares rated as being a very attractive medium-term growth investment, they were then 180p.


Now at 196p the group is valued at £886m, that is up over 73% in just over six months.



The dimensions of this group really are very impressive.


On the basis of the analyst estimates, I am predicting that they will soon be trading in the 200p/225p price range – possibly within the next six months, before breaking even higher in price.

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