Stock of the day 30/09/2015 – Cranswick PLC

It’s been another all-time high hitting year for British fresh food producer Cranswick; can the company provide something tasty to tuck into with its Q2 2015 earnings release on Thursday?

It did take a bit of time for the stock to get going in 2015, however. After opening the year at £13.76 a dull January had led Cranswick to slip to a 2 month low of £12.96 by the start of February, despite a 2% jump in UK underlying sales for the final quarter of 2014 alongside a 38% surge in non-European sales. Yet the strength of those results did eventually lead to a strong February, allowing the stock to cross the £14 mark for the first time since December.

Cranswick then danced around the £14 level for most of March, before its fourth quarter report in April, containing a 4% sales rise due to the falling price of pork and the announcement that it now supplies 50% of Britishpork to China, pushed the company beyond £14.50.


(Source: IT-Finance.com 30/09/2015)

The UK-election boost then really lit a fire under Cranswick, sending it beyond £15 for the first time in the company’s history. Its full year report in the middle of May continued Cranswick’s stellar year, with its revenue hitting the momentous £1 billion for the first time as a 23% increase in non-European sales helping overcome a slowdown in exports to the continent.

By the end of the month Cranswick was sitting firm at or around £16, a price it didn’t stray too far from until the end of July, when its Q1 2015 report lifted the stock even further. An 8% increase in revenue for the 3 months to June 30th continued the company’s robust growth, complimented by another 4% jump in sales and a 14% leap in its Asian exports.

This set Cranswick on the path towards the £17 mark, a price it began to graze in August; however, that month’s Chinese chaos took a toll on the stock, with the company at one point dipping all the way back to a 3 month low of £15.26. Reassurances that its business would be relatively unaffected by the economic situation in China allowed Cranswick to climb back to its year highs, touching an intraday peak of £17.59 in the aftermath of CEO Adam Couch’s comments. Yet it couldn’t hold onto this price for long, and the general, somewhat China-fuelled, bearish sentiment of September has taken Cranswick to a current trading price of £16.21 (IT-Finance.com, 30/09/2015).

Investors, then, will be keen for actual figures on the impact of the China situation, given how reliant Cranswick has been on the country for growth in the past few years. There will also be interest in whether the company will spend any of its all-time high revenue on new acquisitions, the last being the purchase of poultry business Benson Park back in 2014.

Cranswick has a ‘Buy’ rating from Investec and a ‘Hold’ rating from Numis Securities, with an average target price of £16.92.