REMYY - Remy Cointreau Making Smart Long-Term Moves But Valuation Is An Issue

• Remy Cointreau posted better-than-expected fiscal first quarter sales, with a strong two-year comp, but management tempered near-term profit growth expectations on supply chain challenges and business reinvestment.
• Supply chain challenges will be temporary, and direct-to-consumer channel investments make sense, but Remy still has longer-term needs to build the XO cognac and non-cognac businesses, as well as margins.
• I'm more bullish on Remy's opportunity to generate high single-digit long-term revenue growth with improving FCF margins (driving double-digit FCF growth), but the shares reflect this potential.

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