NOMD
I Initiated a position in NOMD Today at $13.59 here is what I like.
1) NOMD now pay a dividend of 5% where I brought hence we are getting paid nicely while we wait. A dividend that should be well covered and easy to pay for the company. Hence that is a plus.
2) NOMD Guided for $1.64-1.76 in euro's with today's rate, hence a range of $1.94-2.08 in USD EPS, hence the midpoint is around $2.01. Hence a valuation of multiple sub 7x times this years earnings, which I feel is too cheap I think a 10X Multiple could put FV around $20. Which would make that a very good return over the next 6-12 months.
3) NOMD Announce a plan of Cost savings and adjusted EBITDA growth of 1-3% in 2026-2028, I believe that will lead to somewhat faster adjusted EPS growth as they have been buying back shares and with price at 52 week lows the one benefit is I guess it takes less money to buy more shares down here. Hence I expect adjusted EPS growth to be in the Mid to high single digits over the next couple of years.
4) NOMD is going to create a lot of FCF over the coming years. which can go to continuing to pay down debt, paying a high quality dividend that may even be increased at times goes on, and buying back shares at least currently very depressed prices.
Conclusion: I like NOMD here and think it is very undervalued at these prices and we get paid while you wait, we have a company who is focusing on increasing FCF and call me nuts I actually think it is important because that can drive higher returns back to shareholders in terms of buybacks and dividends, or continuing to reduce the debt, my guess is the company systematically continue to use FCF to do all 3, and why not. All is just my opinion, and I could always be wrong though.
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