BRFS - BRF: Recent Recovery Was Cyclical Not Operational Still A Hold
2024-05-15 09:47:43 ET
Summary
- BRF S.A. is a Brazilian meatpacker specializing in poultry, pork, and processed foods. The company operates globally and owns Brazil's leading meat-based product brands, Sadia, Perdigao, and Qualy.
- 4Q23 and 1Q24 earnings sent BRF's stock up 30%, thanks to a cyclical recomposition of margins. The company's EBITDA margins went from 5% one year ago to 16% in 1Q24.
- The margin recomposition was expected in a cyclical industry with volatile supply (live animals and feed) and demand (processed meat) markets.
- A reversion of margins could also occur in future periods. That is why I prefer a cycle-average approach to valuation. Considering that approach, the stock is still expensive, so I maintain my Hold rating.
BRF S.A. ( BRFS ) is a Brazilian meatpacker specializing in poultry, pork, and processed foods. The company operates globally and owns Brazil's leading meat-based product brands, Sadia, Perdigao, and Qualy....
BRF: Recent Recovery Was Cyclical, Not Operational, Still A Hold