Nomad Foods raises Q2 revenue outlook
After the close Nomad Foods provided an update two months into the quarter ahead of an investor conference today. Nomad Foods said organic revenue is tracking ahead of expectations and is now expected to increase in the low-double-digit range. Organic revenue growth increased by 14% through the first two months of the quarter. Management’s previous guidance was MSD% organic growth for the year. Consensus expectations for Q2 revenue were 8% growth.
Shares of NOMD are still down on the year despite the acceleration in sales from COVID-19 stay at home restrictions. Some investors may be concerned about when sales decelerate or lapping the current strength next year. Trading less than 15x consensus EPS estimates that are too low, keeps my concerns about decelerating future sales muted. Nomad Foods is benefiting from several longer tailed trends in consumers’ preference for freshness, wellness, and convenience as well as COVID-19 related benefits from more food preparation time and a shift to eating at home. I also would rather own consumer staples companies with momentum in their business when they lap the current period than consumer staples companies that struggled despite the shift to food at home.
Consumer survey points to plateau in grocery spending
In the latest week of our consumer survey, 52% of consumers report spending the same on groceries as the previous week, as seen in the chart below. The percentage of respondents saying slightly less, slightly more, and the same reached a survey high of 89%. As every state has reached some phase of reopening
Beer Purchasers’ Index rebounds in May
The National Beer Wholesalers Association’s monthly Beer Purchasers’ Index bounced from April’s reading of 35 to 66 in May. An index of 50 points or more indicates that purchasing in a segment is expanding while below 50 indicates contraction. The below premium sector reached a record reading of 71 in May. The FMB/seltzer segment returned to 90, compared to 79 a year ago. The craft index rebounded from a low of 14 in April to 42 in May. Imports returned to growth with a reading of 53 in May. With many on-premise outlets still closed, the at-risk inventory index (at risk of going out of code in the next 30 days) for total beer remained at an elevated level of 69, but better than 80 in April.
