NAPA - The Duckhorn Portfolio: The Stock Is Ripe For Picking

2024-03-19 20:28:55 ET

Summary

• Duckhorn operates a portfolio of wine brands in the >$15 luxury segment with a track record of good growth and very high margins.
• The growth has required quite a good amount of capital with increased inventories and a recent investment in a new production facility among other investments.
• The company currently faces issues from slower demand for wine, but has continued to grab market share in a challenging market.
• Duckhorn is acquiring Sonoma-Cutrer Vineyards with a valuation that seems fair, but not immediately creating large shareholder value even with $5 million in expected run-rate synergies.
• The current valuation provides an attractive entry point, in my opinion, as my DCF model estimates good upside for the stock.

Founded in 1976, The Duckhorn Portfolio ( NAPA ) operates a portfolio of wine brands throughout North America. The company’s brands include names such as Duckhorn Vineyards, Paraduxx, Decoy, Goldeneye, and Migration. Duckhorn gets the majority of revenues through wholesale, but also sells wine directly to customers....

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