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Remy Cointreau

RCO: XPAR (FRA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
€733.00QxgsmmzCqscfqnt

Remy Sees Resilient Performance in Full-Year Sales; Valuation Frothy as Uncertainty Litters Horizon

With shares of narrow-moat Remy Cointreau on a tear heading into its fiscal full-year sales update, investors ostensibly expected continued robustness in its top-line recovery. The results were solid, with evidence of strong consumer takeaway for core brands, but with shares down modestly on the news, it looks like the market had loftier expectations. For our part, with consolidated sales almost exactly in line with our pre-print forecast (at EUR 1 billion), we plan to stand pat at our fair value estimate of EUR 118. While time value would’ve otherwise pushed our valuation up modestly, we will wait for the firm to report full-year results (in about a month’s time) before revisiting, as this release will give us a better feel for key operating barometers (like profitability and inventory levels) that are core to our model. Remy’s stock continues to trade at a multiple (52 times next year’s earnings) that we deem untenable, and so we think prospective investors should remain on the sidelines.

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