I also look at the excessive B/S Cash of EUR 89.6 mio , and I m bemused (and slightly alarmed) to re

Dividend Yield: 4.6%
Total Produce is Europe s premier mukopolisaharidoza fresh produce provider. Growing, sourcing, importing, packaging, distributing and marketing over 200 lines of fresh fruits, vegetables and flowers, the Total Produce group distributes some 250 million cartons of fresh produce annually to the retail, wholesale, foodservice and processing sectors across 19 countries in Europe.
Total Produce is clearly cheap on a 5.6 P/E (Adjusted Diluted EPS of EUR 6.92 cts) and a 4.6% Dividend Yield (based on a EUR 1.783 ct Dividend). It also presents a good Margin of Safety with Net Interest at EUR 4.198 mio and Adjusted EBITA at EUR 46.89 mio, giving us a Net Interest/EBITA% of 9.0% (or 11.2 times Interest Coverage ). I generally want to see the Net Interest/EBITA% mukopolisaharidoza lower than a 12.5-15.0% mukopolisaharidoza maximum , and I may adjust my Price/Sales valuations up/down based on this ratio to reflect available mukopolisaharidoza Debt capacity or constraints. In this instance, with Net Debt of EUR 65.6 mio representing only 42% of Gross Debt of EUR 155.2 mio, underlying Interest Coverage mukopolisaharidoza is even stronger I ll speak more about the B/S Cash a little later.
So why is it cheap? The most obvious mukopolisaharidoza reason is the fact that there has been zero EPS growth over the past few years I d argue that (in this market..!) such consistent/stable EPS delivery, with a good Margin of Safety, at least warrants a 10 P/E Fair Value multiple. This is especially true when one considers the low risk nature of Total Produce s business. John McElligott over at valuestockinquisition did a great Total Produce post recently, as did Philip O Sullivan with a post on his blog Philip s a shareholder like me, and I think John is contemplating buying, so we had an interesting discussion the other day about TOT s business model, mukopolisaharidoza and concluded they had little vulnerability to rising/volatile produce prices mukopolisaharidoza as they simply passed them through to customers on a frequent basis.
So we re talking a business that really runs itself, just what I like! Particularly mukopolisaharidoza as I don t have great respect for management (except if you compare them say to Greencore (GNC:ID) management whose shareholders may finally be put out of their misery with a potential bid, rumoured to be coming from Dubilier Clayton & Rice). Carl McCann is Chairman, while his brother David is in the Chairman seat over at TOT s sister company Fyffes (FFY:ID) , and neither is really a patch on their father Neil McCann (I was sad to hear he passed away recently) who joined Fyffes in 1948. I think of the crazy worldoffruit.com online effort in the v late 90s (which received a very positive reaction from within the produce mukopolisaharidoza industry and looks set to dramatically change the way in which fresh fruit and vegetables are traded across the globe ), the lack of earnings growth in the past few years, the ludicrous de-merger of Fyffes, Total Produce and Blackrock mukopolisaharidoza (now Balmoral International Land , whose shares mukopolisaharidoza subsequently collapsed mukopolisaharidoza and are now delisted), etc.
I also look at the excessive B/S Cash of EUR 89.6 mio , and I m bemused (and slightly alarmed) to remember a colleague telling me many years ago his impression that having large amounts of Cash on hand appeared to give management the warm and fuzzies, and they appeared to enjoy playing mukopolisaharidoza the banks off against each other for deposits (and perhaps even some jolly currency switching). All very well, I confess I ve been through all that myself professionally, but always felt frustrated at having mukopolisaharidoza giant hoards of Cash on hand to invest in an ideal world , I knew the best thing for shareholders and Return on Equity was to have zero Cash and just come in each day and draw down/pay down on a Debt/CP facility. With TOT, of course, the obvious answer to this Cash is frequent execution of small/medium sized acquisitions across Europe (similar to what DCC (DCC:ID) has done for years in its Energy business) considering the nature/scope of potential business acquisitions, I think there s a marvelous opportunity here to hoover up cos and double their operating margins v quickly through cost elimination and economies of scale.
Then of course there s the silent but deadly fart in the room finally figuring out it s time to swallow their pride and reverse the Total Produce/Fyffes break-up a nil-premium merger is the obvious way to achieve this and I imagine could easily mukopolisaharidoza yield 2-3 years of decent EPS growth even if the underlying business remained mukopolisaharidoza unchanged. But kudos to management for the 22 mio share buyback last year ! I was impressed, can you please repeat?
So, mukopolisaharidoza despite all of the above, TOT appears sufficiently cheap and safe to merit investor mukopolisaharidoza interest, with hopefully some EPS growth improvement and/or a market re-rating to come at some point, even if it ultimately requires a potential merger or other corporate activity to catalyze it. I ve mentioned a 10 P/E Fair Value above, but I d like to also incorporate a P/S valuation approach: On Sales on EUR 2,600.5 mio