Retail Food Group approaching a digestible price

Financial Journalist
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Key points

  • Selling in Retail Food is probably overdone at current levels so expect it to trade above $5 within 12 months.
  • Earning guidance for 2015-16 was for 20% growth in NPAT. Not many other industrials are expecting underlying profits growth of that much.
  • Retail Food Group is no Domino’s. But nor is its valuation. Its PE is less than a quarter of Domino’s forecast PE of 43.

Australia’s love affair with fast food is replicated on the share market, to varying degrees. Domino’s Pizza Enterprises has soared and fried-chicken group Collins Food has leapt this year. But Retail Food Group has fallen too far and is a buying opportunity.

Retail Food was a market darling last year. It soared from $4 in May 2014 to $7.85 in March this year as investors applauded its expansion strategy in gourmet pizza and coffee. Then it slumped to $4.12 after announcing higher costs and write-downs and is back near the 52-week low.

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