Dear investors,
Selling meat and fish to big grocers is usually a low-margin business. But this is not the case with Hilton Food Group, because the company – which has nothing to do with the Hilton Hotels -, always supplies only one food retailer in each region. In the UK, for example, it applies to Tesco, in Holland to Ahold while in Australia and New Zealand to Woolworths.
Hilton Foods strategy: being exclusive creates trust
The advantage of this customer relationship is that an exclusive partnership is maintained, with partners even being offered an insight into their company’s books. This creates trust where otherwise the business partners would be afraid of being cheated by the other. At the same time, working with just one company in each country simplifies logistics and reduces unit costs. Within the industry, Hilton Foods therefore operates with a significantly higher margin.
Sollten Anleger sofort verkaufen? Oder lohnt sich doch der Einstieg bei Hilton Food?
Prices out of hand – Does the cost-plus model work?
Until last year, investors appreciated this working method, but then Hilton was forced to issue a profit warning. The reason was that the variable prices, which only represent about 20% of the product range, were getting a little out of control. However, Hilton Foods sells around 80% of its goods according to the “cost-plus model”. This model sets the selling price on the basis of the company’s own production costs plus a predefined markup.
However, while the shares sank, conditions have returned to normal in the meantime. Therefore, this raises the question of whether the 50% crash was really an appropriate market reaction. Today, the share price is back at the level of 2016, but earnings are 36% higher.
Sollten Anleger sofort verkaufen? Oder lohnt sich doch der Einstieg bei Hilton Food?
Attractive risk/return ratio
The stock is also attractive in terms of its dividend yield, which is 4.46 % based on the current share price. In addition, the dividend is safe, because even after last year’s profit slump, the payout ratio was 64%. This is a very solid value, which could fall into the 60% range this year due to the higher profit. If the company performs as planned, the rate could drop as low as 52% in 2024.
One consequence of this sell-off is that the stock has never been valued lower in the last ten years than it is today. This seems to be an attractive risk/return ratio, which is why the stock is included in the watchlist as a possible candidate for the Hypergrowth potential in the stock market service.
Buy, hold, or sell? – Your Hilton Foods analysis of 16/08 provides the answer:
What are the prospects for Hilton Foods´ development? Is this stock a safe investment for your money?
The answers to these questions and why you need to act now can be found in the current analysis of Hilton Foods stock.
Autor
Kaufen, halten oder verkaufen - Ihre Hilton Food-Analyse von 24.11. liefert die Antwort:
Wie wird sich Hilton Food jetzt weiter entwickeln? Ist ihr Geld in dieser Aktie sicher? Die Antworten auf diese Fragen und warum Sie jetzt handeln müssen, erfahren Sie in der aktuellen Analyse zur Hilton Food Aktie
