Carlsberg: Shares Cheap On Tough Operating Conditions And Questionable M&A

2025-01-08 05:05:57 ET

Summary

• Like much of the alcohol sector, Danish brewer Carlsberg has been a pretty weak performer over the past year or so.
• The business is probably doing about as well as can be expected given tough operating conditions.
• On the other hand, the deal to acquire British soft drinks company Britvic appears more questionable, with the economics looking fairly underwhelming.
• Still, these shares look too cheap at around 8.5x pro forma EBITDA. A re-rate to 10x doesn't require aggressive assumptions, and that would support 30% upside for the shares.

Carlsberg (CABGY)(CABJF) has been a fairly weak performer since my last piece on this Danish brewer. Although its business was holding up relatively well for most of last year, sentiment toward the alcohol sector has been negative for a variety of reasons, while skepticism surrounding recent M&A activity may also be weighing....

Read the full article on Seeking Alpha

For further details see: