With shares of Nomad Foods (NOMD), the biggest frozen food company in Europe, currently up about 19% in November, they’re obviously having a good month. But they really should be having a better one based on how well it performed in Q3. Specifically, while revenues for the recently reported quarter may have only been up 0.5% year-over-year to €763.5 million, the latter still beat the consensus forecast by €10.4 million as NOMD’s decision to preserve margins through significant increases in prices, which were up 12.8% from the prior year, more than made up for the 11.2% decline in volume resulting from market share lost due to these price hikes. And with the better pricing also helping to mitigate the pressure from higher input costs, greater operating expenses and increased interest charges, adjusted earnings fell by just 18.9% to €0.43 or 46 cents (based on the current exchange rate) per share, which is substantially better than the 41 cents analysts were expecting.

On the strength of this solid operational performance and the company’s substantial share repurchase activity year-to-date, NOMD raised its full-year adjusted earnings per share guidance to €1.57-1.60 from a prior range of €1.54-1.57. At the midpoint, this indicates earnings of €0.30 per share in Q4, which are actually a little softer than the €0.32 consensus forecast. But I think this reflects the greater level of caution that all businesses now seem to be modeling into their near-term views than a reflection of any real deterioration in market fundamentals.

It seems NOMD does as well. That’s why it plans on starting a new $500 million share repurchase authorization when the current one expires at year end. And to further reward its shareholders, NOMD announced its plan to institute a regular quarterly dividend in early 2024. While the amount of the latter is still up in the air, I think the confidence this conveys in the company’s future prospects and cash flow production will draw additional investor interest that further adds to recent rebound NOMD’s stock has enjoyed.

Nomad Foods (NOMD) is one of the stocks recommended in our market-beating investment newsletter, Forbes Investor. To find more undervalued stocks with significant upside like NOMD, try Forbes Investor here.


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