Intrinsic Value Davide Campari-Milano N.V. (0ROY.L)

• Previous Close: £10.12
• Intrinsic Value: £2.45
• Upside potential: -76%

Stock Valuation Context

Business Model And Market Position

Davide Campari-Milano N.V. is a leading global player in the premium spirits and alcoholic beverages industry, operating across multiple geographies including the Americas, Europe, and Asia-Pacific. The company’s diversified portfolio spans iconic brands such as Aperol, Campari, Wild Turkey, and Grand Marnier, catering to a broad consumer base through aperitifs, vodka, whisky, and other spirits. Its revenue model is driven by brand equity, strategic acquisitions, and a focus on high-growth categories like ready-to-drink cocktails and non-alcoholic alternatives. Campari maintains a strong market position through premiumization, leveraging its heritage and innovation to capture share in both mature and emerging markets. The company’s vertically integrated supply chain and distribution network enhance its competitive edge, while its selective M&A strategy reinforces its portfolio with high-margin, niche brands. As a subsidiary of Lagfin S.C.A., Campari benefits from stable ownership, enabling long-term strategic investments in marketing and expansion.

Revenue Profitability And Efficiency

In its latest fiscal year, Davide Campari reported revenue of €3.07 billion, with net income of €201.6 million, reflecting a margin of approximately 6.6%. Operating cash flow stood at €618.8 million, underscoring robust cash generation capabilities. Capital expenditures of €460.1 million indicate significant reinvestment in production and distribution infrastructure, aligning with its growth strategy. The company’s efficiency is further highlighted by its ability to maintain liquidity while servicing debt.

Earnings Power And Capital Efficiency

Campari’s diluted EPS of €0.17 reflects its earnings power amid a competitive landscape. The company’s capital efficiency is evident in its disciplined approach to acquisitions and brand development, prioritizing high-return investments. Its operating cash flow coverage of capital expenditures suggests sustainable reinvestment without compromising financial flexibility, supporting long-term value creation.

Balance Sheet And Financial Health

The company’s balance sheet shows €666.3 million in cash and equivalents against total debt of €2.86 billion, indicating a leveraged but manageable position. Its liquidity position is adequate, with operating cash flow providing a cushion for debt servicing. The debt level reflects strategic investments in growth, though investors should monitor leverage ratios in rising interest rate environments.

Growth Trends And Dividend Policy

Campari has demonstrated consistent growth through organic brand expansion and acquisitions, particularly in premium segments. Its dividend policy, with a payout of €0.065 per share, reflects a conservative approach, prioritizing reinvestment over high yield. The company’s focus on emerging markets and premiumization trends positions it for sustained top-line growth, though margins may face pressure from input cost inflation.

Valuation And Market Expectations

With a market capitalization of €7.05 billion and a beta of 0.49, Campari is valued as a stable, low-volatility player in the consumer defensive sector. The market likely prices in its brand strength and growth potential, though valuation multiples should be assessed against peers given its niche positioning and premium focus.

Strategic Advantages And Outlook

Campari’s strategic advantages lie in its strong brand portfolio, global distribution, and disciplined M&A strategy. The outlook remains positive, supported by premiumization trends and geographic diversification. However, macroeconomic headwinds and regulatory changes in alcohol markets could pose risks. The company’s ability to innovate and adapt to consumer preferences will be critical to maintaining its competitive edge.

Sources

Company filings, Bloomberg