Finnish company Huhtamäki, a global producer of food and beverage packaging, boasts a stable and profitable operation, yet its shares have struggled in recent years and its valuation has dropped significantly. For those seeking a defensive investment, Huhtamäki appears to be an attractively priced option, Affärsvärlden writes in an analysis published Monday.
The company's valuation long hovered around 17x ev/ebit, but since spring 2022 and the outbreak of war in Ukraine, the stock has declined even as business performance has remained steady. The valuation is now down to around 11x ev/ebit.
"We find it difficult to see any possible explanation, let alone a logical one, for why Huhtamäki has been so heavily devalued in recent years. The company's revenue has declined somewhat since 2022, but as previously mentioned, this is clearly of a transitory nature," Affärsvärlden writes.
In its analysis, Affärsvärlden ultimately issues a buy recommendation.
"It is hard to identify any clear triggers for a revaluation in the near term, and the stock is not suitable for those seeking a quick gain. But for those who find it appealing to harvest relatively secure cash flows at a low valuation, the stock stands out as a good choice. We conclude with a buy recommendation for Huhtamäki," the publication writes.
Huhtamaki Oyj specializes in developing, manufacturing and marketing paper, cardboard and plastic packaging. Net sales break down by market as follows:
- outside catering (59.3%): disposable packaging and tableware for the fast-food professionals and vending machine. Net sales break down by geographic area between North America (59.6%) and Europe/Asia/Oceania (40.4%);
- food processing industry and consumer goods (40.7%): flexible packaging, films, molded fiber packaging, etc. for the packaging of food, cosmetics, household products, etc.
Net sales are distributed geographically as follows: Finland (1.7%), the United States (35.3%), Germany (11%), the United Kingdom (7.8%), India (6.2%), Australia (4.1%), Turkey (4.1%), Thailand (3.8%), Poland (3%), South Africa (3%), Spain (2.3%) and others (17.7%).
