Rising income margins (+25%), >12% FCF trading at P/E 11

AI Summary

The author presents Jumbo S.A. as a cheap, founder-led Greek/Balkan retailer with rising margins, ~12% FCF yield at a P/E of 11, a debt-free self-funded expansion in Romania and 20% ROIC.

BELA.AT — LONG The author argues Jumbo S.A., a 88-store hyper-store retailer in Greece, Romania, Bulgaria and Cyprus, is cheap at a P/E of 11 while generating over 12% FCF margins, with rising income margins (+25%) and ROIC above 20%. The mechanism claimed is founder-led capital allocation: no long-term debt, expansion funded by FCF, buying previously leased stores at low prices to widen margins, and using franchisees to cover distribution-center overhead. The stated catalyst is Romanian expansion, with roughly 30 stores expected to be added over the coming few years, while other markets are saturated. The author flags competition from Action in Romania and frames the investment as essentially a bet on the company's management mindset.

Rising income margins (+25%), >12% FCF trading at P/E 11

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Hey, I came across Jumbo S.A. ($BELA), a retailer selling toys, household items, stationary and snacks. The company operates 88 hyper-stores in Greece, Romania, Bulgaria, and Cyprus. It also has franchisees in other Balkan countries and Israel (maybe next year Canada). Romania is the current market for huge expansion. Expected to add \~30 stores in the coming few years. Other markets are saturated.

Jumbo has **no LT debt and funds expansion with FCF**. The founder (owning 16.6% of the shares) is **value investing minded**. He expands only when a cheap price is offered for a location. I certainly like the founder's mentality.

>I like to operate the company as if it is poor.   
\~ Mr. Vakakis, founder

Mr. Vakakis doesn't want to buy growth, but wants to **increase per-share value**.

The income margins rise by buying previously leased stores. It happens infrequently as not often a low price is quoted. Margins widen further by using franchisees to pay for distribution center overhead. 

Romania is the country where competitors such as Action, now settle too. Action buys old inventory from brands in the same category as Jumbo. However, Jumbo gets cheap unbranded products directly from the factory. 

The founder welcomes competition as it urges the company to continue to improve.

Regardless of competition, the **ROIC increased to +20%**. FCF margins are between 12 & 20%. If you add the growth CapEx, then the margins are even wider.

The company pays dividends, but the amount is irregular. Management looks at the best use of capital. Thus sometimes share buybacks, extraordinary dividends, or both.

I find the management/founder's mindset unique. Not something you come across with every company. Investing in the company is basically a big bet on the company's mindset.

What are your thoughts? 

Ps: how do I add images to display data to my post? For now, the charts are in the more in-depth write-up about Jumbo here: [https://read.europeanvalueinsights.com/p/greek-retailer-jumbo-value-investing](https://read.europeanvalueinsights.com/p/greek-retailer-jumbo-value-investing)

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u/EuropeanValueInsight Reddit r/ValueInvesting

Cheap founder-led retailer, self-funded Romania expansion

The author argues Jumbo S.A., a 88-store hyper-store retailer in Greece, Romania, Bulgaria and Cyprus, is cheap at a P/E of 11 while generating over 12% FCF margins, with rising income margins (+25%) and ROIC above 20%. The mechanism claimed is founder-led capital allocation: no long-term debt, expansion funded by FCF, buying previously leased stores at low prices to widen margins, and using franchisees to cover distribution-center overhead. The stated catalyst is Romanian expansion, with roughly 30 stores expected to be added over the coming few years, while other markets are saturated. The author flags competition from Action in Romania and frames the investment as essentially a bet on the company's management mindset.

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