Seneca Foods Corporation conducts its business almost entirely in food packaging, which contributed about 99% of the Company's fiscal year 2020 net sales. 93,5% jf their revenue comes from USA.
-Canned vegetables represented 74%,
- Fruit products represented 7%,
- Frozen fruit and vegetables represented 10%,
- Prepared foods represented 8%
- Fruit chip products represented 1% of the total food packaging net sales.
Non-food packaging sales, which primarily related to the sale of cans and ends, and outside revenue from the Company's trucking and aircraft operations, represented 1% of the Company's fiscal year 2020 net sales.
They have strong balance sheet, good multiples, pay back a lot of their debt in a recent time.
- P/E 3,4 TTM
- P/B 0,9x
- P/S 0,3x
- Total debt/CFO 1,09x
Financial results in table below.
| 2016 | 2017 | 2018 | 2019 | 2020 | TTM | |
|---|---|---|---|---|---|---|
| Revenue | 1 279 567 | 1 262 198 | 1 162 894 | 1 199 581 | 1 335 769 | 1 470 772 |
| Net income | 56 399 | 15 895 | -8 480 | 5 747 | 52 335 | 132 170 |
| NI margin % | 4.4% | 1.3% | -0.7% | 0.5% | 3.9% | 9% |
| CFO( operating cash flow) | 39 158 | 24 324 | -13 187 | 97 116 | 127 317 | 140 383 |
| Capex+acquisitions | -48 659 | -32 139 | -47 085 | -37 728 | -65 686 | -58 172 |
| FCF | -9 501 | -7 815 | -60 272 | 59 388 | 61 361 | 82 211 |
With that FCF their fair price about 140 $ per share according to DCF Model. When i calculated that, i have a dollar signs in my eyes))
But then i started going deep in their financials and industry in general.
Seneca Foods its a mature company in the mature market. Their last year revenue growth related to unprecedented demand due to COVID.
According to market overview the global canned food market is growing at a CAGR of 3.86% during the forecast period (2020 - 2025). But Statista 2020 survey ( consumption of canned, jarred, or packajed fruit from 2011 to 2024) of U.S population shows that number of people, who consume jarred or canned fruits decreas overtime, but not dramatically( sucks that i cant put pictures or charts here). Its logical, coz people have a lot more acces to fresh fruits and vagitables, but in the same time population are growing and even if % wise demand on jarred food decresed, in absolute numbers its still the same.
Overall, i think that their natural margins was before COVID and that in this market really hard to grow and surveys confirm it. There are no major factors for their growth in the future and i think revenue and FCF numbers will come back to their preCovid level in one or 2 years. And that its a ± fair price for their shares right now. Plus i didnt like their shenanigans with FIFO/LIFO to increase revenue few bucks here and there.
Fun fuct, they made $10 million cash investment in exchange for a 49% stake in CraftAg LLC, a start-up hemp business with its own seed infrastructure.
Submitted April 23, 2021 at 08:23AM by Egorbl4 https://ift.tt/32U9nbD
