CRERF - Carrefour: The Upside For 2025 Could Be Impressive

2025-01-28 11:14:01 ET

Summary

• Carrefour is undervalued with a P/E of 7-8x, offering a conservative upside and a 6% yield, making it a compelling buy.
• Despite risks like higher costs and a fragmented market, Carrefour's European consolidation and omnichannel efforts are underestimated by the market.
• Carrefour's 2024 targets and 2026E plan show growth in EBITDA, recurring income, and free cash flow, with significant share buybacks enhancing value.
• With a valuation target of €20.5/share, Carrefour meets all my investment criteria, presenting a potential 100%-plus RoR and a strong "Buy" rating.

One of the fun things when being out of the country, as I have been in Africa (Uganda) for going on a month now as of writing this article, is realizing the bigger role that some companies play (if through franchise holding in the African market). I have, for instance, always known that Carrefour ( CRRFY ) ( CRERF ), natively traded under the symbol CA in Paris ( source ), is a good and competitive hypermarket chain. But until I visited emerging markets, I did not realize what roles this chain plays in the day-to-day.

I have known for quite some time that Carrefour is not only undervalued but valued at a point that's not justifiable and should be considered a "cheap" conservative and defensive stock in the consumer staples sector. The company's fundamentals are very solid indeed, with a conservative upside to multiples of below 10x P/E, where most of the consumer defensives I follow manage much higher than that. ...

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