Is Nomad Foods Limited (NYSE:NOMD) Potentially Undervalued?

In the ever-evolving landscape of the food industry, Nomad Foods Limited (NYSE:NOMD) has carved out a niche for itself as a leader in the frozen food sector. With a string of impressive financial results, including its ninth consecutive year of record-high net sales and Adjusted EBITDA, the company has garnered attention from investors and analysts alike. But the question remains: is Nomad Foods potentially undervalued?

To answer this, let's delve into the company's recent financial performance and compare it to its industry peers and competitors. Nomad Foods reported a 1.8% increase in reported revenue for the full year 2024, reaching €3.1 billion, and an 11% increase in Adjusted EPS to €1.78. These figures are a testament to the company's ability to achieve organic sales growth, margin expansion, and market share gains. The company's strong financial performance has also led to increased investor confidence, as evidenced by the Board of Directors' approval of a 13% increase to the company's 1Q25 cash dividend.

Looking ahead to fiscal year 2025, Nomad Foods expects to maintain this momentum with continued top and bottom-line growth. The company anticipates organic revenue growth of 1%-3% and Adjusted EBITDA growth of 2%-4%, while meaningfully increasing investment in its products and brands. Adjusted EPS is now expected to be €1.85-€1.89, implying growth of 4-6%, versus the prior outlook of €1.81-€1.85. This translates to $1.94-$1.98 based on current exchange rates. The company also expects full year adjusted free cash flow conversion of 90% or greater.



The company's management and board have expressed optimism about the future growth potential of Nomad Foods. Stéfan Descheemaeker, Nomad Foods' Chief Executive Officer, stated, "Our 2024 results demonstrate the impact of our focused brand investments and operational excellence, marking our ninth consecutive year of sales and Adjusted EBITDA growth." Noam Gottesman, Nomad Foods' Co-Chairman and Founder, commented, "As we enter our tenth year as a public company, I have never been more optimistic about the growth potential of Nomad Foods." This optimism is reflected in the company's expectations for future growth and its commitment to shareholder returns.

However, despite these impressive financial results and optimistic outlook, Nomad Foods' stock valuation may not fully reflect its potential. The company's Price-to-Earnings (P/E) ratio of 13.17 is significantly lower than that of BellRing Brands (BRBR), one of its competitors, which has a P/E ratio of 34.66. A lower P/E ratio indicates that Nomad Foods is trading at a lower price relative to its earnings, suggesting it might be undervalued. Similarly, Nomad Foods' Price-to-Sales ratio of 0.98 is much lower than BellRing Brands' ratio of 4.51, further indicating potential undervaluation.

In conclusion, Nomad Foods' recent financial performance, strong earnings growth, and optimistic outlook for future growth suggest that the company may be undervalued. While the company's stock valuation may not fully reflect its potential, investors should keep a close eye on Nomad Foods as it continues to deliver impressive results and maintain its commitment to shareholder returns.