Fyffes (FYFFF, Financial) is an Irish fruit grower and distributor that has been increasing sales and earnings for several years. The stock is reasonably priced, but I’d like to learn more before purchasing shares.
The company has 297 million shares and trades at a market cap of €463.7 million ($524 million). Earnings were 12.73 euro cents and the PE ratio is 12.25. The dividend is 2.7 euro cents and the dividend yield is 1.76%. It takes $1.13 to buy one euro.
Revenues were €783 million in 2012, €836 million in 2013, €1.09 billion in 2014, and €1.2225 billion in 2015. EPS over that time frame were 88 euro cents in 2012, 8.8 euro cents in 2013, 11.4 euro cents in 2014, and 12.7 euro cents in 2015. As you can see, sales and earnings have been increasing sequentially.
The balance sheet is pristine. Cash is €22.8 million and accounts receivables were €119 million. Short term debt is €60.7 million, long term debt is €1.3 million and accounts payable were €104 million. Fyffes produced €16.509 million in cash flows from operations and spent €12.268 million in capital expenditures. Free cash flow was €4.241 million. The free cash flow yield is about 1%, which is pretty low. In 2012 it was €18.8 million.
Fyffes was the first fruit brand in the world in 1929, meaning that it put its name on the product. The company imports bananas, pineapples, melons, organics and other fruits. The company has operations in Europe, U.S., the Caribbean, and Central and South America. Fyffes owns 40% of Balmoral Land Holdings.
Chiquita and Fyffes almost merged in 2014 but Chiquita’s shareholders voted it down. The deal would have allowed Chiquita to enjoy Ireland’s lower tax status. Instead, Chiquita was acquired by a Brazilian orange juice maker and a private equity firm.
The company recently acquired Canadian mushroom producer Highline for $145 million. Other news includes labor problems at a melon plant in Costa Rica and Honduras. Banana prices have increased from $933 a metric ton in October to $1,011 in January of this year. It would be interesting to see how fruit prices affect Fyffes.
Before I buy the stock, I’d like to know a few things. The first is what is the value of its real estate holdings? I have no idea, but you could probably see what fruit plantations are selling for. It could be a net asset value story. The second is do they sell to Aldis, Lyttle and Trader Joe’s? These are hot grocers that are stealing market share from the establishment all over the world. I’d certainly want to know more about the fruit industry. An article in The New Yorker wrote about the banana blight back in 2011. Fyffes is an interesting stock, but I’d like to learn more before buying.
