Dual-listed Irish drinks company C&C (CCR) has been faced with price deflation brought on by intensifying competition in the retail market and was forced to book a hefty write-down on US assets in its February year-end results. But with trading stabilising and the benefit of recent investment set to show through this year, we think the business and its lowly-rated shares could now finally start to make good progress.
- Improved payout ratio targeted
- Highly cash generative
- Robust balance sheet
- Remedial measures for C&C Brands division
- Intense US competition
- Stricter Scottish drink-drive regulations
There's no doubt that trading conditions remain challenging, but we think C&C offers promise, particularly in light of the group's strong cash generation and the steps being taken to transform its brands division to a low-cost operating model. With a dividend yield in excess of 3 per cent and an enterprise-to-cash-profits (EV/Ebitda) multiple of just 9.6 times - a quarter below the peer average - we view C&C as a value opportunity.