Del Monte Pacific Limited (SGX: D03) is a food and beverage company with a dual listing on the stock markets of Singapore and the Philippines. The company has four main consumer brands, namely, Del Monte, S&W, Contadina and College Inn.
The company’s products include fresh pineapples, packaged fruits, vegetables, and tomatoes, sauces, condiments, pasta, broth, and juices.
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Over the last 12 months, Del Monte has seen its stock price fall by 16% to S$0.285 currently. This price is also just a whisker higher than a 52-week low of S$0.280. Given these, investors may be wondering: Is Del Monte a bargain stock now?
Unfortunately, there is no easy answer. But, we can still get some insight by comparing Del Monte’s current valuations with the market’s.
The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).
Del Monte currently has a PB ratio of 1.2, which is slightly lower than the SPDR STI ETF’s PB ratio of 1.3. This makes Del Monte 8% cheaper than the market based on the PB ratio. On the other hand, Del Monte’s PE ratio is significantly higher than that of the SPDR STI ETF’s (219 vs 11.1). The company’s dividend yield of 2.85% is also lower as compared to the market’s yield of 2.91%. (The lower a stock’s yield is, the higher its valuation.)
In sum, we can argue that Del Monte is trading at a big premium to the market, given its significantly higher PE ratio, slightly higher dividend yield, and lower price-to-book ratio.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.