Pernod Ricard Earnings: Challenging Environment Yet Medium-Term Outlook Remains Intact

Wide-moat Pernod Ricard reported fiscal 2024 results, which were overall, below our revenue and profitability expectations. Still, we maintain our EUR 185 fair value estimate as we think the slowdown is cyclical rather than structural, leaving our long-term forecasts unchanged. Further, management reiterated their medium-term guidance of 4%-7% organic net sales growth and organic operating margin expansion of roughly 55 basis points. While the firm is trading below our intrinsic fair value estimate, we believe the cyclicality of the category means the stocks are unlikely to provide the defensive qualities investors seek in consumer staple equities.