To achieve average annual stock market performance of 9.0% over the next 6 years, Fresh Del Monte Produce shares will need to reach $39. To achieve Upper quartile performance, Fresh Del Monte Produce’s stock price will need to reach $46 by 2028. As reflected at the current price of $23, what future Fresh Del Monte Produce operating performance is the market anticipating?
Executive Summary
- Key Fresh Del Monte Produce characteristics: above average expected growth, stability, average profitability, and below average financial strength. A big positive influence on Fresh Del Monte Produce’s valuation is its superior Profitability.
- Very low valuation, lagging shareholder returns. Current valuation levels are very low relative to the Fresh Del Monte Produce Peer Group. Recent market returns have substantially underperformed the Fresh Del Monte Produce Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Fresh Del Monte Produce shares should reach a level of $78 by 2028 — an 24.8% per year total shareholder return. A 2028 stock price of $39 would reflect median performance and a price of $46 would be required to reach upper quartile performance.
- Historical growth has been high relative to the Fresh Del Monte Produce Peer Group and forecasted growth is relatively average. Fresh Del Monte Produce’s historical income statement and balance sheet growth are not available.
- Profitability is very high. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
- Fresh Del Monte Produce’s risk profile is favorable. Overall variability has been very low with very low revenue variability, very high E.P.S. variability, and very low stock price volatility. Financial Strength is below average and earnings’ expectations are only average. The debt/capital ratio has declined.
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