Pernod Ricard: Attractive At 23x P/E Before Likely Strong H1 FY23 Results
(Preview) Company Update (RI FP) (Buy)
Summary
Pernod Ricard is a top global spirits company targeting a 6-9% operating profit CAGR. Its share price is down 3% vs. a year ago.
The company is reporting H1 FY23 results next Thursday (February 16). We expect these to be strong, based on other reports so far.
PR shares are trading at 22.8x FY22 Adjusted EPS and have a 2.2% Dividend Yield, implying a valuation similar to Diageo's.
Despite strong growth in FY21-22, on balance, we do not believe current earnings to be too elevated.
With shares at €186.80, we expect an exit price of €275 and a total return of 56% (14.4% annualized) by June 2026. Buy.
Introduction
We review our investment case on Pernod Ricard SA ("PR") ahead of its H1 FY23 results release on February 16.
We upgraded our rating on PR to Buy in March 2022, after its share price fell 13.5% in two months and returned to our target range. PR's share price is at present roughly flat from the level at our upgrade and down 3% versus a year ago. (A previous Buy rating on PR, betwe…