RCL Foods (RCL.JO)

Consumer · JSE · South Africa

R8.45+4.32% today

Fundamentals

Market capR7.47B

P/E ratio6.9

Dividend yield6.68%

Revenue growth (YoY)-1.9%

Profit margin4.1%

Return on equity10.7%

52-week rangeR7.63 to R11.29

Valuation and ratings

DCF fair valueR10.29

Upside to fair value+21.8%

Moat score27/100

Overall rating55/100, Buy

RCL Foods trades at R8.45, which is 22% below the R10.29 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.

Our moat model scores it 27 out of 100, which is little in the way of a moat. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.

It changes hands at 6.9 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.

About RCL Foods

RCL Foods Limited operates as a food manufacturer in South Africa. The company operates through the Groceries, Baking, and Sugar segments. It is involved in culinary products, including mayonnaise, peanut butter, and rusks; milling, specialty, and bakery products; breads, buns, rolls, and pies; as well as pet food products and beverages, and sugar and molasses-based feed operations. The company sells its products primarily under the Ouma, Nola, Yum Yum, Nutso, Bobtail, Catmor, Dogmor, Ultra Dog, Canine Cuisine, Optimizer, Feline Cuisine, Mageu Number 1, Monati, Mnandi, Supreme, Tafelberg, Safari, A1, 5 Star, Sunbake, Piemans, Sunshine, and Selati brands. In addition, it engages in treasury, international investments, farming, marketing, and food innovation and research activities. The company was formerly known as Rainbow Chicken Limited and changed its name to RCL Foods Limited in August 2013. RCL Foods Limited was founded in 1960 and is based in Durban, South Africa.

Industry: Packaged FoodsHQ: South Africa

RCL.JO passes 6 of our 30 screens today

Each screen prints the exact criteria it used, and the circumstances in which it is wrong.

Undervalued on cash flow

Companies trading at least 25% below what our discounted cash flow model says the future cash is worth today.

Deep value, with a pulse

A very low earnings multiple is usually a warning. This screen demands a low multiple AND evidence the business still works.

Dividend powerhouses

Yields above 3%, filtered for the one thing yield screens never check: whether the company can actually afford it.

Fortress balance sheets

Companies that owe almost nothing. They will survive things that kill their competitors, and they can buy the wreckage afterwards.

Low volatility defensives

Companies that move less than the market and pay you to wait. The holdings that let you sleep, and let you hold everything else.

Consumer staples

The companies that sell what people buy regardless of the economy. Dull, and dull is the entire point.

Common questions

Is RCL Foods (RCL.JO) undervalued?

Against our discounted cash flow estimate of R10.29, RCL.JO at R8.45 is 22% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.

What is RCL.JO's P/E ratio?

RCL.JO trades at 6.9 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.

The full research page for RCL.JO, with financial statements, ownership detail, peer comparison and alerts, is free inside the app.

Open RCL.JO in the app Free guides and screens

Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.