FTSE 250 incumbent Cranswick (LSE: CWK) released its interim results today. I’ve had my eye on the shares for a while but I wonder if now is a good time to buy some for my holdings. Let’s take a closer look.
Cranswick shares on the up
To start with, let’s break down Cranswick’s recent share price performance. As I write, they’re trading for 3,696p. At this time last year, the shares were trading for 3,086p, which is a 19% increase over a 12-month period.
The shares are down 2% today, Tuesday. But, they have easily outperformed the FTSE 250 index in recent months, so I’m not too concerned.
Breaking down the results and the investment case
Let’s tuck into these results, then. Cranswick reported that revenue and operating profit rose by 12.3% and 25%, respectively, compared to the same period last year. Profit before tax and earnings per share rose by 23.6% and 13.8%, respectively. This great performance led to an interim dividend hike of over 10%, which is pleasing to see.
I can see that Cranswick is boosting its infrastructure with the aim of additional growth. It’s investing heavily in its pig farming operations, as well as opening a new houmous facility in Manchester. Cost control seems to be a big focus for the business during these turbulent times.
So what does all this mean for me as a potential investor? Well, it’s great to see Cranswick doing well against the backdrop of soaring inflation and rising interest rates.
When I reviewed Cranswick shares recently, I was worried soaring costs could take a bite out of profit margins. Plus, with a cost-of-living crisis, I was concerned trading may dip due to people looking for arguably cheaper, ‘essential’ ranges in supermarkets as budgets are tighter than ever. These issues could still play a role as volatility shows no signs of ending yet. However, the business seems to be navigating these challenges well.
From an investment perspective, Cranswick shares would boost my passive income stream with a dividend yield of 2.2%. This is higher than the FTSE 250 average of 1.9%. However, I’m conscious that dividends are never guaranteed.
Finally, Cranswick shares aren’t the cheapest, on a price-to-earnings ratio of 16. However, I believe that sometimes it’s worth paying good money for a quality business. Based on recent results, the business is moving in the right direction and performing well amid a challenging marketplace.
My verdict
The fact that Cranswick said in its report that “the outlook for the current financial year ending 30 March 2024 is now expected to be at the upper end of current market consensus”, fills me with confidence. However, I’m wary that forecasts don’t always come to fruition.
I’ve decided that the next time I have some investable cash, I’d be willing to add some Cranswick shares to my holdings. If it performs this well during a downturn, there’s no telling how well it could do down the line when things improve.
