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Remy Cointreau

RCO: XPAR (FRA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
€749.00TrjjymcScvlyvqf

Remy Managing Costs Well Amid Coronavirus but Long-Term Growth Will Not Come Cheap; Shares Expensive

We didn’t expect many surprises heading into narrow-moat Remy Cointreau’s fiscal first-half earnings print, with the firm already disclosing sales and quite a narrow guidance range for operating profit a month ago. Still, despite overall results largely in line with our expectations, the segment breakdowns and management’s margin commentary likely piqued investor interest. Ultimately, we plan to raise our fair value estimate to EUR 115 from EUR 110 to reflect time value as well as modestly higher near-term profitability. Our long-term outlook (high-single-digit top-line growth and more than 28% adjusted operating margins) is unchanged, however. We continue to believe the assumptions required to justify today’s valuation reside in the tail of the spectrum of potential outcomes for Remy, with only a negligible probability of actually coming to fruition.

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