Weak Switching Costs and a Commodity Product Crucial to Barry Callebaut’s Lack of Moat; Shares Rich
After taking a fresh look at Swiss-listed Barry Callebaut, a supplier of cocoa and ingredient chocolate, we reiterate our no-moat and stable moat trend ratings. We are slightly raising our valuation for the company to CHF 1,500 from CHF 1,480, which would equate to a fiscal 2019 price/earnings multiple of 23 times and an EV/adjusted EBITDA multiple of 13 times. Currently, the shares look overvalued.As an integrated manufacturer that sources a quarter of all cocoa beans produced worldwide and en...
Barry Callebaut is a cocoa and chocolate company, engaged in serving the food industry, from food manufacturers to professional users of chocolate such as chocolatiers, pastry chefs or bakers and products for vending machines. Co. offers a range of chocolate and other cocoabased products with numerous recipes. Co. also provides a comprehensive range of services in the fields of product development, processing, training and marketing. Co. is fully vertically integrated along the entire value chain: from sourcing of raw materials to finished products on the shelf. Co.'s operations are organized in three business units: Cocoa, Food Manufacturers, Gourmet & Specialties Products.
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