Financial Trading Blog
Stock of the day 17/02/2016 – Associated British Foods PLC
Although its full year figures back in November saw the company’s pre-tax profits plunge 30% to £717 million following a 1% drop in group revenue to £12.8 billion, Associated British Foods still managed to climb to an all-time high of £36.06 by the start of December. The relatively positive reaction to the full year figures was arguably down to the company’s usual white knight, Primark. The omnipresent fashion chain saw a 1% rise in like-for-like sales joined by an 8% surge in revenue to £5.3 billion alongside a 2% jump in operating profit to £673 million, a superb year that also saw it open its first US store in Boston.
(Source: IT-Finance.com 17/02/2016)
Yet the situation quickly turned sour as December continued, and by the end of 2015 Associated British Food had fallen back to £33.48. The company’s post-Christmas update in the middle of January, with warm-weather impacted Primark’s sales (though it still managed a 7% sales rise for the 16 weeks ending 2015), then only solidified the sell-off that had begun on the first day of the New Year’s trading, leaving the stock at a 6 month low of £28.83.
Since then the stock has managed to recover much of the year’s early losses (despite an incredibly rocky start to February), now sitting at a current trading price of £32.12 (IT-Finance.com, 17/02/2016). Most recently the company has been in discussions with Illovo, a South African sugar producer (the biggest on the continent) that ABF already owns 51.35% of, about buying the remaining unowned shares.
Associated British Food PLC has a consensus rating of ‘Hold’ with an average target price of £32.89.
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