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:
Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
Amira Nature Foods Ltd.’s current Price/Book of 1.24 is about median in its peer group.
We classify ANFI-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
ANFI-US has relatively high profit margins while operating with median asset turns.
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.
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.
The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
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.
The company is likely overinvesting in a business with only median returns.
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
Benzinga – Javier Hasse – November 10, 2015
Capital Cube – Analysis – November 12, 2015
ANFI – Press Release – November 16, 2015
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