Stock price when the opinion was issued
Still likes it. Concern now is that with higher interest rates and rising unemployment, consumers are being more price-conscious. Company has acknowledged this in its biscuit category.
Reassessing pricing and packaging. EMs are about 40% of sales, she sees higher growth there. Selling assets, redeploying proceeds in higher-growth adjacent categories.
International snack giant. 200-day MA is sideways to slightly negative, stock price is now below it. Fundamentals show only mid-single-digit earnings growth, paying 20x for it. Cost pressures, margin compression. Intense competition. Foreign currency has not helped.
For a consumer staples name, look at Loblaw or COST.
Down YOY, but has actually held up well during recent market uncertainty. 40% of revenue from EMs, which tend to have stronger long-term, secular growth. Cocoa prices spiked, and chocolate is 30% of its business, so they guided earnings down. Long-term outlook still attractive, expanding into adjacent categories.
Biggest issue is growth. Well run, amazing brands. Valuation north of 20x, yet growth profile not as robust. Economic uncertainty, bit of weakness in discretionary spending.