Koninklijke Ahold Delhaize NV – GuruFocus.com
Koninklijke Ahold Delhaize NV (XAMS: AD, Financials at 30) shares show all signs of modest undervaluation, according to GuruFocus Value’s calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of € 24.565 per share and market capitalization of € 25.2 billion, Koninklijke Ahold Delhaize NV share shows all signs of modest undervaluation. The GF value for Koninklijke Ahold Delhaize NV is shown in the graph below.
Given that Koninklijke Ahold Delhaize NV is relatively undervalued, its long-term stock return is likely to exceed its business growth, which has averaged 12.4% over the past three years and is expected to grow 0.10% per year over the next three to five years. years.
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Since investing in companies with poor financial strength could result in a permanent loss of capital, investors should carefully consider the financial strength of a company before deciding whether or not to buy shares. Examining the cash-to-debt ratio and interest coverage can provide a good initial perspective on the financial strength of the business. Koninklijke Ahold Delhaize NV has a cash-to-debt ratio of 0.33, which is in line with the average for companies in the Retail – Defensive sector. On this basis, GuruFocus ranks the financial strength of Koninklijke Ahold Delhaize NV at 5 out of 10, which suggests a fair balance sheet. Here is Koninklijke Ahold Delhaize NV’s debt and cash flow over the past few years:
It is less risky to invest in profitable companies, especially those whose profitability is constant over the long term. A business with high profit margins is generally a safer investment than one with low profit margins. Koninklijke Ahold Delhaize NV has been profitable 10 in the last 10 years. During the last twelve months, the company achieved a turnover of 74.8 billion euros and a profit of 1.23 € per share. Its operating margin is 2.75%, which places it in the mid-range of companies in the Retail – Defensive industry. Overall, Koninklijke Ahold Delhaize NV’s profitability is ranked 8 out of 10, indicating strong profitability. Here is the turnover and net result of Koninklijke Ahold Delhaize NV in recent years:
One of the most important factors in the valuation of a business is growth. Long-term equity performance is closely linked to growth, according to GuruFocus research. Companies that grow faster create more shareholder value, especially if that growth is profitable. The average annual turnover growth of Koninklijke Ahold Delhaize NV is 12.4%, which is better than 83% of companies in the Retail – Defensive sector. The 3-year average EBITDA growth is 14.2%, which ranks among the average for companies in the Retail – Defensive industry.
Another way to assess a company’s profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on Invested Capital (ROIC) measures the extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay, on average, to all of its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating shareholder value. In the past 12 months, Koninklijke Ahold Delhaize NV’s ROIC was 4.24, while its WACC stood at 2.23.
In conclusion, the share of Koninklijke Ahold Delhaize NV (XAMS: AD, 30 years Financials) is considered to be slightly undervalued. The company’s financial position is fair and its profitability is solid. Its growth is in the mid-range of companies in the Retail – Defensive industry. To find out more about the Koninklijke Ahold Delhaize NV share, you can view its 30-year financial data here.
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