And in fact, Ahold is still trying to gain confidence. In the past three years, Ahold has underformed the AEX by a whopping 20% and this is not purely due to poor earnings growth. It cannot be denied that sales in the United States are staying behind. But it becomes more and more likely for Ahold to dispose of its North-American operations and this might offer shareholders some extra pennies.
In spite of the poorly performing US operations, the figures don't lie. Ahold trades at a p/e half that of its industry peers. Earnings for 2008 are expected to grow significantly, despite of overseas operations staying behind. Worst case scenario, Ahold trades at a forward p/e of 10 (assuming EPS of 0.80 in 2008) and is thereby still undervalued. Add to that the earlier-mentioned increasing likelihood of Ahold disposing of its overseas operations rather quickly and there you have your 'buy-advice'.
OK, I am not Moberg, but maybe one day he will read this and take my advice into account. Divest your American operations and focus on growing countries. Focus on Central and Eastern Europe, invest in new EU countries and try to gain some experience in Asia by acquiring small operations in a country like India. It should be no rocket science that a company needs to invest in growing countries, not in mature markets. Once this underperforming asset is lost, investors will start to regain their faith in the stock.
Mr. Moberg, I am at your disposal if you need my advice. For now, I assume a price target of EUR 10 for end 2007, based on the likely disposal of US operations in combination with the current low p/e ratio. Ahold currently trades at EUR 7.97.
AHO 1-yr chart
Disclosure: Author has no position in AHO.