Consistently beating analysts’ expectations is usually a recipe for share price gains and it is a trend which has been in evidence for some time at Anpario (ANP:AIM). Yet the natural sustainable feed additives specialist has seen its shares ease back in recent months. A 19 June trading update referring to geopolitical uncertainties despite also flagging strong first-half sales. We think this has created an enticing buying opportunity for risk tolerant investors.
In our view the company has the ability to navigate any future headwinds. Anpario, whose additives support animal health, hygiene and nutrition, is well diversified by geography and species, winning market share and widening its moat through investment in innovation, since competitors struggle to replicate its science-backed products.
The company is benefiting from a trend which sees food producers around the world transition to natural feed solutions and away from banned or toxic feed chemicals and antibiotics and the safety and sustainability of global food production increases against a backdrop of population growth.
The company is well-placed to limit US tariff impacts following the acquisition of Bio-Vet, which brought Anpario a modern US production facility from which to expand and shift UK production should the need arise; Bio-Vet’s unique technology helping dairy cows recover quicker from the impact of avian influenza is currently in big demand.
Anpario’s forecast-beating results (31 March) for the year to December 2024 revealed a 76% surge in pre-tax profit to £6.1 million on revenues up 23% to a record £38.2 million. Balance sheet strength is another plus at Anpario. While the cash balance slipped from £10.5 million at the start of the year to £9 million as at the end of May, that should still give the company plenty of capacity to expand its international footprint, explore complementary acquisitions and boost earnings through share buybacks.
Shore Capital forecasts a rise in pre-tax profit to £6.4 million on £44.7 million revenue this year, building to £6.8 million and £47 million respectively in 2026. Based on the broker’s 31.5p earnings estimate for 2026, and a forecast dividend hike to 12.4p, Anpario trades on a forecast price to earnings ratio of 12.1 times.
This represents a significant discount to where it has been historically. It also offers a well-underpinned dividend yield of 3%. We would expect to see a substantive uplift from here, on the basis the company can deliver on its well thought out strategy and continue to surprise to the upside with earnings. First-half results on 10 September offer a potential near-term catalyst.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
magazine
