Motoring ahead
Wincanton offers equity holders a mixture of growth and returns well in excess of the prospects implied by its discounted valuation. We forecast three-year 3.0% operating profit growth and 8.6% EPS growth, strong cash generation, a 3.5% yield and low leverage at 0.5x net debt to EBITDA. The fact that, despite its strong outlook, the stock is trading at a 25% discount to its peers is a reflection of its large pension deficit and the fact that investor sentiment is yet to fully recover after its difficult period. In our view, this provides investors with an opportunity to enter the stock before it re-rates. There is 28.5% upside to our fair value of 329p.Wincanton provides logistics and supply chain solutions. Co.'s segments are: Retail & Consumer, which include retail general merchandise, retail grocery and consumer products; and Industrial & Transport, which include transport services, construction and other. Co.'s retail & consumer operations manage the flow of goods from production through to delivery to the store or home. Co.'s industrial & transport operations handle a range of industrial products through a network. The products are as diverse as fuel, bricks and engineering components alongside the transport of containers and general goods. It also includes the maintenance of large goods vehicles and heavy goods vehicles.
Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.
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