BRF SA Muddling Through And Still Weighed Down By Debt And Capex

The last five months or so have been challenging ones for BRF SA (NYSE:BRFS). Brazilian consumers are under pressure from high inflation, and although input costs have been better of late for this large poultry and packaged food producer, margin leverage is still sub-optimal. What's more, as the company continues to invest into transformative capex, liquidity has come under pressure, leading to a higher net debt position.

It's harder to find strong arguments for a bullish stance on BRF today. While the situation in Brazil seems to be stabilizing, there's still quite a bit of uncertainty in key foreign markets. What's more, rivals like JBS (OTCQX:JBSAY) have more flexibility when it comes to pricing and assortment. Maybe the best bullish argument at this point is that expectations have come down for this stock and the shares don't look all that expensive; if the company can execute on its multiyear turnaround strategy, there is greater upside potential, but execution has been pressured here of late.

 

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BRF SA Muddling Through And Still Weighed Down By Debt And Capex