Due Diligence for Investors in Amira Nature Foods
The Zacks Research Report we linked below discusses the results of a BDO LLP investigation into financial misdeeds by the company, resulting in a determination that all allegations against ANFI were baseless. The company press release announces a new distributor of the company’s products in Northeast America; Price Choppers stores with 130 locations. The Capital Cube analysis also linked below compares the performance of ANFI with four of its peers. The Benzinga report takes a look at long view investing in ANFI.
Our View: We thought the Capital Cube analysis was detailed and complete so we reiterate its conclusions here:
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Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
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Amira Nature Foods Ltd.’s current Price/Book of 1.24 is about median in its peer group.
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We classify ANFI-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
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ANFI-US has relatively high profit margins while operating with median asset turns.
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Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
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Over the last five years, ANFI-US‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
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The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
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While ANFI-US‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
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The company is likely overinvesting in a business with only median returns.
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Our analysis rates Amira Nature Foods Ltd. as UNDERVALUED relative to its peers.
ANFI may have potential for the long term investor interested in the food commodity distribution markets. In a space that is primarily dominated by mature enterprises, ANFI may be the one still finding its path to maturity and eventual stabilization in its growth and ROI metrics.
Zacks – Zacks Equity Research – November 12, 2015
http://finance.yahoo.com/news/amira-foods-anfi-surges-clearing-175005907.html
Benzinga – Javier Hasse – November 10, 2015
http://finance.yahoo.com/news/deep-value-investor-explains-why-171039625.html
Capital Cube – Analysis – November 12, 2015
ANFI – Press Release – November 16, 2015
http://finance.yahoo.com/news/amira-nature-foods-ltd-announces-135600712.html
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