Morningstar

Bega Cheese Ltd BGA

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Stock XASX Rating as of
A$5.27 −0.07 (1.31%)
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As of Delayed Price Open

Company Report

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Bega Earnings: Faster Turnaround in Bulk Profitability

Angus Hewitt

We lift our fair value estimate for shares in Bega by 5% to AUD 4.40 per share, mostly due to the time value of money and a quicker return to profitability for the bulk business. Fiscal 2024 underlying EBITDA lifted 2% to AUD 164 million—about 3% below our forecast. The branded business continues to perform strongly, with top-line growth of about 6% and EBITDA margin expansion. This was offset by losses in the bulk business, which processes commodity milk. There has been a disconnect between global dairy commodity prices, into which the bulk business sells, and the Australian farmgate milk prices Bega pays. While commodity prices have been falling since late-2022, Australian milk prices have been elevated.

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Price vs Fair Value

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BGA is trading at a 299% premium.
Price
A$5.34
Fair Value
A$4.40
Uncertainty
Medium
1-Star Price
A$7.41
5-Star Price
A$8.42
Economic Moat
Yzjym
Capital Allocation
Kqgcgby

Bulls Say, Bears Say

Bulls

Bega Group's strategic shift away from dairy products lowers its exposure to volatile milk prices and diversifies earnings.

Bears

Changing consumer trends toward dairy-free and vegan diets could lead to declines in per capita dairy and cheese consumption, weighing on the majority of Bega's earnings.

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Trading Information

Previous Close Price
A$5.34
Day Range
A$5.25–5.33
52-Week Range
A$2.43–5.39
Bid/Ask
A$5.27 / A$5.28
Market Cap
A$1.61 Bil
Volume/Avg
114,220 / 643,270

Key Statistics

Price/Earnings (Normalized)
52.04
Price/Sales
0.47
Dividend Yield (Trailing)
1.50%
Dividend Yield (Forward)
1.50%
Total Yield
1.50%

Company Profile

Bega Group is an Australia-based dairy processor and food manufacturer of well-known brands including Bega Cheese and Vegemite. Bega operates two segments: The branded segment produces consumer packaged goods primarily sold through the supermarket and foodservice channels, while the bulk segment produces commodity dairy ingredients primarily sold through the business-to-business channel.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Small Core
Total Number of Employees
1,700
Website
https://www.begacheese.com.au

Competitors

Valuation

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Metric
BGA
ATM
SAP
Price/Earnings (Normalized)
 52.0425.8917.14
Price/Book Value
 1.603.481.70
Price/Sales
 0.472.650.69
Price/Cash Flow
 12.2517.339.75
Price/Earnings
BGA
ATM
SAP

Financial Strength

Metric
BGA
ATM
SAP
Quick Ratio
 0.592.510.62
Current Ratio
 1.163.091.59
Interest Coverage
 2.0644.974.38
Quick Ratio
BGA
ATM
SAP

Profitability

Metric
BGA
ATM
SAP
Return on Assets (Normalized)
 1.34%9.75%4.47%
Return on Equity (Normalized)
 2.88%13.35%9.02%
Return on Invested Capital (Normalized)
 3.60%10.78%6.44%
Return on Assets
BGA
ATM
SAP

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