It's difficult to figure out the contrasting response in the market to the recent excellent full-year results from IAWS and what are expected to be good results from Greencore later in the year. These two stocks are virtually two sides of the same coin and easy to compare, given their common areas of operation.
IAWS shares have risen to 215p since the results were announced last week - and that puts IAWS on a historic p/e of less than 13 and a forward p/e of less than 12. These might not be amazing ratings compared to earlier in the year, but they are still more than acceptable when most industrials struggle to break of single-figure earnings multiples.
Greencore is one of those single figure p/e companies and is now trading at little more than half its 456p after the Pauls Malt acquisition earlier this year. Since then markets have fallen, but Greencore seems to have taken an unjustifiably big hit, especially as it has done many good thing this year.
The Pauls and Paramount acquisitions went a long way towards dispelling the view that David Dilger is acquisitions-shy and these two deals reduce the sugar dependence even further. The Imperial Holly investment does, however, take some of the gloss off the group's recent corporate activity, but not to the extent of virtually halving the share.
If Greencore does manage to buy the two Spillers flour mills that supplies, among other, its Kears baking business, then the shares should get a boost. That would leave the other two Spillers mills on the block to IAWS.
Philip Lynch might have been a bit dismissive last week about formally dividing up the Spillers between IAWS and Greencore, but this observer, for one, will be not in the least surprised if Philip Lynch and David Dilger make common cause and try ensure that these businesses fall into Irish hands.
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