Why Nomad Foods Stock Is Sinking Again
Shares of Europe's No. 1 frozen food company, Nomad Foods (NYSE: NOMD), are down 11% as of 11 a.m. ET after delivering fourth-quarter earnings. For the full year, Nomad saw sales decline 2%, gross profit margins dip 250 basis points, and adjusted earnings per share (EPS) slide 7%, as the company absorbed roughly $100 million in supply chain inflation without raising prices on consumers. Guidance wasn't much better, with the company forecasting organic sales to drop 2% to 5% and adjusted EPS to fall between 4% and 13% as it executes its "year of transition" under new Chief Executive Officer Dominic Brisby.
However, it isn't all doom and gloom for Nomad Foods. Full-year retail sell-out (sales from retailers to customers) rose 0.4%, indicating that consumer demand is stronger than the company's sales figures suggest. While Nomad has lost a bit of market share over the last couple of years, the frozen foods industry in Europe typically grows by 2% annually, creating a steady tailwind. Furthermore, Nomad remains the market leader in its niche, with its top 25 category and country product combinations (e.g., fish sticks in the U.K.) commanding an average market share 2.3 times that of its next-largest peer.
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Source Fool.com
