Greencore Group (LON:GNC)'s shares experienced a significant surge on Tuesday, with a 14% increase observed at 03:29 ET (07:29 GMT). This followed an announcement made by Chief Executive Dalton Philips (LON:0LNG) regarding the company's expected rise in adjusted operating profit for the fiscal year ending September 29, 2023.
Despite facing a challenging consumer environment and grappling with macroeconomic uncertainty and inflation, Greencore anticipates a profit ranging between £74 million to £76 million ($90.6 million-$93 million). This estimate surpasses the market consensus provided by the company itself, which was set at £70.1 million. The anticipated profit increase is attributed to the company's robust performance in the second half of the year, a period that is typically challenging due to seasonal comparisons.
According to InvestingPro data, Greencore's market capitalization stands at a promising $490.11 million, with a P/E ratio of 15.96. The company's revenue for the last 12 months (LTM2023.Q2) is recorded at $2.337 billion, marking a substantial 24.77% growth. This aligns with Greencore's reported 10% revenue growth for fiscal 2023.
In addition to this positive forecast, Greencore also reported a 2% growth in the fourth quarter. The company's strong financial performance has led it to initiate an immediate share buyback of £15 million. This move is part of a larger £50 million capital return plan for shareholders, demonstrating the firm's confidence in its fiscal 2024 outlook.
InvestingPro Tips reveal that Greencore has high earnings quality, with free cash flow exceeding net income, and its management has been aggressively buying back shares. These tips provide some insight into the company's recent financial decisions and its strategic approach to increasing shareholder value. For more tips like these, consider subscribing to InvestingPro, which offers a wealth of additional insights into investment strategies.
InvestingPro data also shows a positive 1-year price total return of 7.17%, despite a recent drop in the past three months. The company's fair value, according to analyst targets, is set at $1.1, while InvestingPro's fair value estimate is slightly higher at $1.46. These figures suggest that Greencore's shares may be undervalued, indicating potential for further growth.
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