Investors, as a group, aren’t often the most logical
creatures, so maybe there will be some disappointment at the
restructuring plan that BRF SA (BRFS)
management laid out on October 8 during its Brazil-based Investor Day
(with a New York-based day to follow on October 10). Management didn’t
offer up any quick fixes or any reason to think that the business will
suddenly turn on a dime. What they did offer, though, was a very sound
and credible strategy for building a stronger-for-longer company with
substantial upside in both its home market of Brazil and its large
foreign markets.
Valuation remains tied to the
eventual long-term outcomes of this restructuring plan. If and when the
restructuring activities start showing the expected benefits in
2019/2020 and beyond, I fully expect the multiple to expand again.
Likewise, through that process the company will put some ugly near-term
annual FCF results in its rear view mirror. While the current share
price looks basically fair for what BRF is today, a more bullish outlook
on that restructuring plan supports worthwhile upside for long-term
investors.
Read the full article here:
BRF Lays Out A Good Restructuring Plan, But No Quick Fixes
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