Growth may be faltering for confectionery producer Cloetta, but pick-and-mix sweets are drawing customers back, and profitability continues to rise in the wake of the scrapped factory project in the Netherlands. The stock also remains attractive, despite a robust rebound. This is the assessment of EFN analyst Martin Blomgren in a report commentary published on Wednesday.
The stock has experienced strong performance over the past twelve months, rising by just over 30 percent. Over three years, the share has climbed by more than 70 percent, not including dividends.
The analyst estimates that earnings per share should reach just under SEK 2.70 next year, resulting in a price-to-earnings ratio of 13. A dividend in line with the company's target to distribute at least half of its earnings would yield a direct return close to 4 percent.
"Given that Cloetta is delivering at its current level without growth, and considering there is likely further margin improvement ahead--where 14 percent is the long-term goal--the buy recommendation stands," writes EFN's analyst.
