Cranswick a ‘great’ business but ‘fairly valued’, says RBC Capital

RBC said it remains "enthused" by Cranswick's growth outlook, supported by strong execution, capacity expansion and premiumisation opportunities.

"However, we believe its attractive growth profile, impressive return on invested capital and quality of management team are at last reflected in the share price following almost 50% outperformance of the European consumer staples sector over the last three years," it said.

RBC said that even with its upgraded forecasts, it sees limited room for Cranswick to rerate further, with its shares already trading at a premium to some global conglomerates in the sector, including Nestlé.

"Following consistent over-delivery, sentiment towards Cranswick is understandably overwhelmingly positive, which also suggests to us that there is little room for anything but perfect execution," RBC said.

"We remain confident that Cranswick's capacity expansion and contract wins will continue to drive volume growth, while more premium offerings should be supportive of price/mix.

"However, price increases to offset labour/ National Insurance cost increases could impact on volume growth, preventing us from being more constructive on growth near-term and placing our profit before tax estimates in line with consensus expectations."

At 1340 GMT, Cranswick shares were down 0.9% at 4,945p.