Breville Remains Expensive Despite European Growth Prospects

We make no changes to our AUD 11.20 fair value estimate for shares in Breville Group. Breville is a high-quality business. The firm enjoys significant brand strength, with its small electrical appliances commanding a substantial price premium over competitors--particularly in the United States. We see this as sustainable given the firm's extensive track record of reinvestment, underpinning its narrow economic moat. We continue to project an EPS CAGR of 12% over the five years to fiscal-year 2024 driven by the continuation of strong sales growth in North America, and the successful launch of the Sage brand in Europe. However, we do not expect the Sage brand to replicate the success of Breville in North America and believe the market remains too optimistic about Breville's prospects in Europe. Last trading at AUD 17.44, shares in Breville continue to screen as expensive.