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Nomad Foods due diligence.

Hatchworks has conducted due diligence on Nomad Foods, one of the largest frozen food company’s in Europe that owns a portfolio of leading brands like Bird Eye, Iglo, Findus, Goodfella’s and Aunt Bessie’s.

Nomad Foods (NOMD) was founded in 2015. They manufacture, sell and distribute a range of branded frozen food products across 13 European countries, with the largest markets being in Sweden, France, U.K., Italy and Germany.

Revenue is currently broken down as follows:

  • Frozen Fish: 40%.
  • Frozen vegetables: 20%.
  • Ready meals, frozen poultry and pizza: 40%.

Headquartered in Middlesex, United Kingdom, Nomad Foods is listed on the New York Stock Exchange, under the symbol ‘’NOMD’’.

Financials — Nomad Foods
(Source: Marketscreener.com, investing.com)

Current market cap is $4.8B and stock price is around $24.86.

With a predicted net-income of €262M for 2021E, this points to a P/E ratio of 17.9x. The revenue/sales forecast is €2.4B for 2021E, indicating an EV/Sales ratio of 1.95x.

In terms of profitability, a small operating margin loss of 16.3% is predicted for 2021E.

Nomad Foods (NOMD) do not currently pay dividends.

In August 2020 Nomad Foods (NOMD) released their Q2 2020 results and surpassed Wall Street’s expectations, showing strong financial growth compared to Q2, 2019, namely:

  • Reported revenue increased 11.4% to €599M.
  • Organic revenue growth of 12.3%.
  • Reported Profit for the period of €63M.
  • Adjusted EBITDA increased 21% to €119M.
  • Adjusted EPS increased 26% to €0.34.

At present, the pandemic is changing the long-term behavior of consumers. With many people staying at home, food delivery services have already become a significant revenue generator in many countries.

Nomad Foods (NOMD) has seen increasing demand for online sales during the covid-19 lockdown; in April, for example, demand shot up by a whopping 80%. This has placed Nomad Foods (NOMD) in a unique position as a leader in Europe’s frozen food sector. They also launched their plant-based brand called ‘’Green Cuisine’’ which is already available in certain countries and more to come.

According to our analysis, Nomad Foods beat expectations and overall looks fundamentally solid. However, they don’t pay dividends and, on closer examination, their growth prospects are outperformed by their peers. Their share price is trading at all time high and so Hatchworks will keep Nomad Foods on its radar for potential better entries.

The Hatchscore is 4.3 out of 10. Full details can be found on Hatchnet: www.hatch-net.com/companies

What is Nomad Foods?

One of the largest frozen food company’s in Europe that owns a portfolio of leading brands like Bird Eye, Iglo, Findus, Goodfella’s and Aunt Bessie’s. Nomad Foods manufacture, sell and distribute a range of branded frozen food products across 13 European countries.

Big Investors:

  • Pershing Square Capital Management LP.
  • Permira Advisers LLP.
  • Fidelity Management & Research Co. LLC.
  • Toms Acquisition I LLC.

Advisors and Bookrunners:

  • Goldman Sachs & Co.
  • Barclays.
  • Citigroup.
  • Credit Suisse.
  • UBS.

What are the risks?

  • Increased distribution costs or disruption of transportation services could adversely affect Nomad Foods profitability.
  • Nomad Foods does not hold long-term contracts to deliver those supplies to customers and must renegotiate supply and pricing terms of their products on a regular basis which could affect their operational business.
  • Sales are seasonally dependent. For example, during the winter months frozen food sales are usually higher.

Competitors:

  • Flowers Food (FLO).
  • Conagra Brands (CAG).
  • Campbell Soup (CPB).

Management team:

  • Noam Gottesman: CO-Chairman
  • Stefan Descheemaeker: CEO.
  • Same Rene Zekhout: CFO.

The Hatchworks Team

The forecast figures are based on the data of Marketscreener.com, and not from hatchworks: https://www.marketscreener.com/NOMAD-FOODS-LIMITED-25805461/financials/

Legal Disclaimer — This report summary has been generated as a result of Hatchworks’ proprietary company vetting and filtering system. The level of due diligence conducted on investible assets conducted ranges from mediocre to significant, the latter being the case where Hatchworks has explicitly taken strategic positions in. By no means is the information in this file to be relied on as investment advice; this includes Hatchworks’ algorithmic composite score known as ‘Hatchscore’. Hatchworks has not received any compensation for this research. For more information you can reach us at info@hatchworksvc.com. This report is not for distribution in the United States of America. It is closed to U.S citizens. If you are a U.S. citizen, you should delete this report or return to sender.

Written by

Heading up the group’s R&D activities for Hatchworks.

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