Wednesday, October 28, 2020

An International Equity holding: Nomad Foods Ltd. (NOMD, $24.89): “Nomad-der What I Do, All I Think About is You” by: Quinn McDaniel, AIM Student at Marquette University

Nomad Foods Ltd.  (NOMD, $24.89): “Nomad-der What I Do, All I Think About is You”

By: Quinn McDaniel, AIM Student at Marquette University      


Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.


• Nomad Foods Ltd. (NYSE:NOMD) manufactures and sells frozen foods for human consumption under brands such as LUTOSA, la Cocinera, Birds Eye, Iglo, and Findus. Headquartered in Middlesex, the United Kingdom, Noam Gottesman and Sir Martin E. Franklin founded the company in April 2014. 

• The company operates through only one business segment which is Frozen Foods and is seen as a profitable, growing company.

• EPS growth for the last three years has been 38% which may seem quick, but seems to keep the excitement up for stock pickers. 

• Their long-term financial strategy is to deliver sustainable organic top and bottom line growth by transforming the frozen food industry, investing in their brands and acquiring new businesses in order to accelerate growth. 

• With a successful recent tender offer, management is happy to be efficiently returning excess capital to their shareholders. 

Key points: Nomad Foods Limited is a company with continuous growth and is catching the eyes of investors. Even with the COVID-19 pandemic, frozen food has proved to be one of the most durable consumer categories. Moving forward, the company expects their values to transcend beyond this current period and appeal to even more consumers in a post-pandemic world. 

Management believes that the company is uniquely positioned with their strategies, resources and execution of discipline in order to accelerate growth and drive abiding value creation for their stockholders. Pleased with their strong first half 2020 performance, they expect organic revenue growth to remain aloft. The company leans towards raising their guidance while enabling the acceleration of strategic investments as well. The end goal is to convert the adoption of frozen food and trial Nomad’s brands into permanent consumption behavior.

The recent quarter for Nomad Foods Limited portrayed several highlights such as sustained organic revenue growth even with relaxed European restrictions, increased factory output, improved customer service levels, gross margin expansion exceeding expectations, and robust adjusted free cash flow generation. These notables of 2020 have led the company to where they are today. 

There are multiple strategic drivers that supported the sustained organic revenue growth beyond the pandemic. New customer retention, investing behind their core portfolio, and their growth of the introduction of Green Cuisine. These drivers are the reason the company is in their 14th consecutive quarter of organic revenue growth. 

What has the stock done lately?

The performance of the stock has shown growth consistently with their 3M change up 18.09%, 52W change up 31.26%, and 5 years change up 70.77%. Month by month, the company seems to hit all time high share prices which keeps the recommendation of analysts to buy, buy, buy. 

Past Year Performance: Nomad Foods Limited shows reported revenue growth of 7% for the past year as well as organic revenue growth of 2.1%, and adjusted EBITDA increase of 15%. While being a relatively newer company, these signs of growth over the past year show positive outcomes down the line.

Source: FactSet

My Takeaway

Being someone who is interested in profitable, growing companies, Nomad Foods Limited is a smart buy for investors. With the company’s earnings continually taking off, this sort of growth is eye-catching and a large investment held by insiders is a positive sign. With this strong growth, the hope is that it can bring about a significant improvement in the business economics. Frozen foods don’t seem to being going anywhere and not even a worldwide pandemic can stop this company’s growth. 

Source: FactSet