DAVY VIEW

Our focus on Greencore has less pertained to top-line delivery, which has been robust post pandemic, but more to assessing sustainable margin. Our view remains that future growth is unlikely to accrue at historical economics, a function of margin dilutive volume infill, the upweighting of distribution activities, higher labour costs and inflation. Recent reference to “whether to renew contracts” may infer a stricter focus on returns or retailers beginning to flex their muscle. On our revised forecasts, the stock trades on just 4x EV/EBITDA, although forecasting error is high.