LANC short pitch:
– Seller of packaged food to grocery stores and restaurants, looks to be short.
– Core retail business faces secular challenges – volume is falling from the shift to healthier foods.
– New product introductions and pricing catch-up have masked underlying volume declines.
– However, these benefits should abate in the coming quarters.
– Company’s 2024 earnings estimates assume margins return to pre-2021 food price spike levels, which is way too bullish.
LANC valuation:
– LANC trades at >20x this year’s EBTIDA or about 50x FCF.
– Much better businesses trade at these multiples.
– Fair value is 40% lower.
Exp. gain: 40%
Full write-up (free guest account required):
https://www.valueinvestorsclub.com/idea/LANCASTER_COLONY_CORP/4007682662#description