Strong Execution and a Niche Business Model Drive ABF’s Prospects; Shares Fairly Valued
After reassessing our assumptions for Associated British Foods, we are lifting our fair value estimate to GBX 2,660 from GBX 2,600. Our estimate implies fiscal 2018 adjusted P/E of 20 times and enterprise value/adjusted EBITDA of 10 times. We reaffirm our no-moat rating, as we believe that opportunities to support sustainable competitive differentiation in the company's fast-fashion and grocery units are limited. We see the shares as fairly valued, properly accounting for Primark’s strong value-...Associated British Foods is an international food, ingredients and retail group. Co. operates in five segments: Grocery, which manufactures grocery products, including hot beverages, sugar and sweeteners, vegetable oils, bread and baked goods, cereals, ethnic foods, and meat products; Sugar, which grows and processes sugar beet and sugar cane for sale to industrial users; Agriculture, which manufactures animal feeds and provides other products and services for the agriculture sector; Ingredients, which manufactures bakers' yeast, bakery ingredients, enzymes, lipids, yeast extracts and cereal specialities; and Retail, which buys and merchandises value clothing and accessories.
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