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So, been meaning to write something out for a bit to help contribute. I don't have this all worked out to a certainty, so feel free to dispute my reasoning, add things I've missed, etc. Alright:
**The Business:**
Hilton Foods is a food processing company. Customers are the likes of Costco, Walmart, Tesco, etc. Plenty of talk about how their facilities are "highly automated", but I doubt I would be able to find data on \[labour cost / kg produced\] to verify that between them and appropriate competitors.
Something like 75% red meat, 15% seafood, 5% convenience, 2% vegan, revenue breakdown in the past. This was a bit of a hack job to amalgamate, so don't put much stock in the specifics (they don't even sum to 100), but close enough for an idea of what they do. Note that seafood has higher margins, so has an outsized impact on earnings, relative to it's revenue %.
The red meat seems to be largely sold under "Our cost + x", long term contracts. So inflation of raw materials (cows, etc) is passed on quickly. Inflation in labour is not. Seafood appears to be largely sold under fixed contracts, so inflation to all CoGS matters.
**The Stock Price:**
You'll notice 3 big drops in a 5 yr graph. Brief explanation seems helpful to frame what's been happening:
Sept 2022: This was the release of the Half 1 reports (uk traded, so halves, not quarters). Very high inflation in price of fish had to be absorbed, killing the highest margin segment. They were also in the process of expanding, so there was an increase in debt at the same time. The outlook they gave here mentions cost of living increases making consumers cost-conscious, and an "Unprecedented raw material price increases – particularly seafood". This was a genuinely bad report.
Sept 2025: Release of H1 2025 reporting. Appears to be the first mention of export problems from their "Foppen" (one of the aquisitions from 2022) smoked salmon (one of the highest margin items) facility to the US. Facility had some sorta listeria outbreak (or something like that, don't remember or care about the specific disease / bacteria). They had to write off tonnes of inventory, and are now using air freight (as opposed to sea) from a differenct facility to honour their US-Costco contracts. Also high white fish prices, and anticipated further increases caused them to increase inventory, either intentionally or due to lack of sales. FCF quite negative, even w/o including their capex on a plant in Canada (contracted to walmart domestically though, so no issue w tariffs for this new facility).
Nov 2022: Release of "Trading Update" (something they appear to do in lieu of Q1 and Q3 reports). 2025 guidance was cut, due to ongoing issues w Foppen -> US exporting, inflation, etc. Company mentioned that it "expects profit progression in the next financial year (2026) to be difficult".
**The Accounting:**
Adjusted N.I. / EPS: they exclude weird one-off stuff, and back out that weird IFRS accounting for leasing / "right of use asset" stuff. No exclusion of stock-based comp, massive and continuing "restructuring" exclusions, or anything else that is obviously suspect to me. YMMV. Analyst estimates for EPS clearly seem to be targeting their adjusted numbers, not the official figure.
FCF: Interest paid is counted as an operating expense (not required worldwide, like I think it is in the US), so FCF can be used as it would be w a US GAAP-regulated company, w/o adjustments for interest.
Alrighty, so that's where we were at up to when I first bought. Since then, they have released another "trading update" in lieu of Q1 2026 reporting. Maintains their guidance for 2026 "Adjusted PBT", which by my napkin math, should line up roughly w analysts' expected Adjusted EPS. The US Costco contracts are back to being shipped by sea, though maybe still being rerouted through the Netherlands? This was unclear.. Stock popped a bit, and has maintained that level, after this news.
**Where Do We Go From Here?:**
Wow, this is kinda long already, sorry about that. I'll take a look if there's anything frivolous I can edit out before posting (other than this), but it all seems at least somewhat salient to me.
I really find this way to graph a few metrics as useful to my thinking. The analysts I've listened to seem to often have inside contacts in their companies, and it also lets you see how accurate they've been in the past (though, of course, they have the ability to revise estimates for the future). Of course, periods of continued eps growth generally command a higher multiple, and when that growth gets disrupted, the share price has fallen by a greater % than the reduction in earnings. I did not turn on the FCF/Shr data, as a high spike in 2023 distorted the graph. If anyone cares, I can submit this w FCF included. I did check, and there are no estimates for 2029 earnings from the data source I use to auto-generate these. Data service is sometimes incorrect, but I checked several individual data points, and it all appears correct. Price is not the annual high and low, but the highest and lowest weekly close, which I find is a decent way to exclude weird spikes. I have to manually fetch the adjusted eps figures, so laziness is why they only go back so far.
**ALSO:** note that london trades in pence, not pounds. Forward P:E is 12, not 1200.
[https://imgur.com/a/JrdmbVr](https://imgur.com/a/JrdmbVr)
For a business like this, I think tangible equity is useful, so might as well also look at it over time, and in relation to price. Again, currently 2x, not 200x
[https://imgur.com/a/w6eg5so](https://imgur.com/a/w6eg5so)
And one last graph, to show where the stock has traded, relative to current year analyst estimates.
[https://imgur.com/a/sSffrRd](https://imgur.com/a/sSffrRd)
**Ok, So... ?**
\- Well, management has talked about fixing up their vegan and smoked salmon operations to "increase strategic optionality" (I take this to mean they will consider selling, once improved), as well as returning their focus to "where they have a competitive advantage" (referring to red meat). They are waiting on us govt to lift export restrictions on the foppen (smoked salmon) plant in Greece, will not be until H2 2026 at the earliest, they say. That all sounds decent to me.
\- Analysts are predicting a return to earnings growth, and they have been quite good in the past. Get a few yrs of this in a row, and presumably there'll be multiple expansion as well.
\- They are in the unbranded food industry, so there's only so much impact AI, unemployment, etc can have on demand. Ppl will likely continue to eat (though, red meat could be cut as a luxury)
\- Their debt is mainly in GBP, so UK rates are the ones w the biggest impact on their debt payments.
I have bought some already (as mentioned), but at a notably lower price than today's. I was hoping to buy more, but am less sure now, because I'm an idiot, and keep wanting to hit another ask that starts with a '4'. This is looking less and less likely. 😄 Decent dividend too, if you prefer your cash to be paid to you, rather than staying in the business and (presumably) increasing the share price. Ok, that's everything I can think of right now.. gimme your best shots. I will review my notes at some point if the discussion takes off, in case I've missed anything.