AG Barr - Brand-led, cash-generative and acquisitive (initiation)
AG Barr is a leading UK beverage producer with a clear strategy for growth across its multi-brand portfolio including IRN-BRU, Rubicon and Boost. Revenue growth has reaccelerated to 5% in H226 and, with high operating margins of c.15% and excellent cash conversion, the group is well placed to grow organically and through acquisition.As recently announced, the group has acquired the complementary brands Fentimans and Frobishers for a combined £51m, adding potentially c.10% to group revenues.
In this detailed report we review the attractive investment thesis for AG Barr and conclude that successful execution of management’s strategy will drive a further rerating.
We initiate coverage with an 800p Fair Value estimate, equating to 1.7x EV / Revenues, c.16x PER and a c.4.5% FCF yield (cal 2027).
A.G. Barr is engaged in the manufacture, distribution and sale of soft drinks. Co. operates in three segments: carbonates, still drinks and water, and other (including Funkin cocktail, ice-cream and other soft drinks). Co.'s brands include IRN-BRU, Rubicon, Strathmore, Funkin, Barr Flavors, KA, and Tizer, and its partnership brands include Rockstar and Snapple.
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