Shares of Cranswick rose following a positive trading update by Investing.com

Investing.com — Shares of Cranswick plc, one of the UK’s leading food producers, rose after its trading update for the 26 weeks ended September 28, 2024.

At 5:33 am (0933 GMT), Cranswick was trading 5.9% higher at £4,993.4.

“Trading at the end of the first quarter was stronger than previously expected,” the company said in a statement.

The flagship UK business saw strong volume growth, indicating robust consumer demand and effective go-to-market strategies.

In addition, the company’s growing hog operations have begun to yield positive results, further aiding overall performance.

As a result, Cranswick anticipates that its performance in the first half of the year will exceed that of the same period last year, a forecast that has been warmly welcomed by the market.

There has been considerable interest in Cranswick over the past two months as investors are drawn to the compelling narrative surrounding the company and the effective execution of the strategy, Barclays analysts said in a note.

However, many have noted the relatively high valuation of around 18x FY25 P/E, which positions Cranswick ahead of several European and UK small- and mid-caps, as well as Consumer Staples large-caps.

“We believe the valuation still offers upside potential for arguably the best European composite commodity name in the sector, with consistent results and earnings delivery that continues to diversify its revenue mix,” said analysts at Barclays.

“We believe the valuation still offers upside potential for arguably the best European composite commodity name in the sector, with consistent results and earnings delivery that continues to diversify its revenue mix.

The company’s continued investment in its asset base is critical to maintaining its competitive advantage. The company has successfully commissioned a new accommodation facility in Worsley, Manchester.

This investment is expected to increase production capabilities and meet growing consumer demand for plant-based food options, aligning with current trends towards healthier eating.

“We continue to anticipate total investment exceeding the £100m investment guidance and are looking at ROCE of around 20% as projects mature – this should underpin continued performance of growth expectations,” they analysts at Jefferies said in a note.

Looking ahead, while Cranswick’s management remains cautious about the wider economic and geopolitical landscape, “our outlook for the current financial year ending 29 March 2025 is now expected to be at the upper end of current market expectations ,” the company said.

“This solid performance gives us confidence that the stock’s recent strong performance can be sustained,” analysts at RBC Capital Markets said in a note.