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small-cap

Opportunities to Peck at These US-Listed Small-Caps – FDP, ULBI

Dec 15, 2021 | Team Kalkine
Opportunities to Peck at These US-Listed Small-Caps – FDP, ULBI

Fresh Del Monte Produce, Inc.

FDP Details

Fresh Del Monte Produce, Inc. (NYSE: FDP) is a leading vertically integrated producer and distributor of fresh-cut fruit and vegetables in Europe, Africa, and the Middle East, as well as a leading producer and marketer of prepared fruit and vegetables, juices, beverages, and snacks. The Del Monte brand is used to sell the company's products worldwide. Its main manufacturing facilities are in North, Central, South America, Asia, and Africa.

Latest News:

  • Steps Towards Carbon Reduction: FDP stated on November 04, 2021, that its emission reduction objectives had been approved by the Science Based Targets initiative (SBTi) as commensurate with the levels required to satisfy the Paris Agreement's goals. The 27.5% reduction goal applies to greenhouse gas emissions from the company's operations (scopes 1 and 2) and is in line with the reductions needed to keep global warming well below 2 degrees Celsius. Ahead of COP26, the FDP commits to reducing Scope 1, 2, and 3 Greenhouse Gas Emissions by 2030.
  • Price Increase: FDP notified customers on October 27, 2021, that prices for bananas (including organics and plantains), pineapples, and fresh-cut fruit would increase on November 01, 2021. The decision was made due to extraordinary market conditions and inflationary pressures affecting all industries, particularly FDP's production and supply chain.

9MFY21 Results:

  • Minor Increase in Revenues: The company's net sales increased by 1.08% during 9MFY21 (ended October 01, 2021) to USD 3.23 billion from USD 3.20 billion during 9MFY20 (ended September 25, 2021), primarily due to high volumes within its other products and services and new and value-added products segments.
  • Progress in Net Income: FDP witnessed an increase in net income to USD 90.60 million during 9MFY21 from USD 47.30 million reported during 9MFY20.
  • Leveraged Balance Sheet: As of October 01, 2021, the company's cash and cash equivalents stood at USD 19.00 million, with total debt (including finance lease liabilities) of USD 477.10 million.

Key Risks:

  • Customer Concentration Risk: FDP's top ten largest customers contributed 33% of its net revenue in FY20. Further, Wal-Mart, Inc. also contributed 9% of total revenue in FY20. As a result, losing any of these critical customers could harm the company's financials and cash flows.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.