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NOMAD Foods Ltd.

|Includes: Nomad Foods Ltd. (NOMD)

Nomad Foods has taken a big hit because of declining Like For Like sales in their major brands. This is an acquisitive company in a solid profitable industry. The issue is we don't have a lot of details on the business except for superficial financial information.

I don't think you have enough information here to make informed judgements as to whether this constitutes a good investment or not. We don't even have a breakdown of sales by brands: Iglo, Findus, Birdseye, La Cocinera, Lutosa and Findus.

Sure, there are positives. It is a stable cash flow stream that can be levered up by management to juice up return on Equity for shareholders. And management is smart and willing to do precisely that. It's a good industry + a top management team.

But the valuation metrics aren't meaningful here since Gross Margins are on the decline and EBITDA margins are being hit too. LFL sales could spike up, but I am not confident we know how that will happen.

In the meantime, there's not an insignificant amount of leverage here: $1.9b on $360MM of EBITDA. That's 5.3X. There's risk here if LFL sales don't turn.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.