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Remy Cointreau

RCO: XPAR (FRA)
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Morningstar Rating for Stocks Fair Value Economic Moat Capital Allocation
€448.00RjnnfqJhyydzgx

Remy Off to Torrid Top-Line Start in FY22; Valuation Still Frothy as Consumption Paradigms Uncertain

With the shares of narrow-moat Remy Cointreau on a meaningful rally heading into the company's fiscal first-quarter sales update, investors were probably looking for not only a strong quarter, but also commentary from management suggesting robust demand. The firm delivered on both fronts, with its reported triple-digit organic growth quite impressive despite numerous extenuating factors (like soft comparisons and exceedingly low inventories heading into the fiscal year). Still, the stock’s tepid reaction to objectively strong results evinces, in our view, the increasingly fanciful long-term performance implied by the market valuation. We plan to increase our fair value estimate to around EUR 141 per share from EUR 136 to reflect time value as well as the strong commercial execution thus far this year. However, we suggest prospective investors remain on the sidelines, as we still don’t see current multiples as tenable longer term.

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