Pernod Ricard (RI) AI Stock Analysis

• Market Cap: €21.61B
• Dividend Yield: 5.46%
• Average Volume (3M): 509.19K
• Price to Earnings (P/E): 19.7
• Beta (1Y): 0.95
• Revenue Growth: -3.68%
• EPS Growth: -45.85%
• Country: FR
• Employees: 19,557
• Sector: Consumer Defensive
• Sector Strength: 55
• Industry: Beverages - Wineries & Distilleries
• EPS (TTM): 5.06
• Shares Outstanding: 252,269,200
• 10 Day Avg. Volume: 551,977
• 30 Day Avg. Volume: 509,187
• PEG Ratio: 1.58
• Price to Book (P/B): 3.30
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 38.94
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €108.93
• Price Target Upside: 26.63% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 63 Neutral
• Price Target: €91.00 ▲(5.79%Upside)

Pernod Ricard's strong financial performance is somewhat offset by bearish technical signals and limited valuation upside. The company benefits from robust profitability and a solid dividend yield, but challenges in revenue growth and cash flow, along with negative technical trends, weigh on the overall score.

Positive Factors

Financial Performance

Management was able to grow underlying EBIT margin by 65bp despite a 4.1% organic sales decline.

Market Expansion

Pernod Ricard has established a strong presence beyond the US and China, with double-digit growth from 2019 to 2024 in Brazil, Poland, Turkey, and Japan.

Product Strategy

The company is focusing on expanding Absolut, Olmeca, and Jameson in China, which are gaining traction as consumers shift toward spirit cocktails and by-the-glass purchases.

Negative Factors

Macroeconomic Risks

Key risks include potential further deterioration in macroeconomic conditions in China and slower than expected market recovery in the US.

Market Challenges

Current US tariff is not expected to materially impact FY25 earnings, but the outlook remains challenging given the risks of prolonged US tariff pressures and broader recessionary concerns.

Operating Environment

The stock has been downgraded to HOLD with a revised target price of EUR86, due to the increasingly challenging operating environment and potential delay in earnings recovery until FY27 or later.

Pernod Ricard Business Overview & Revenue Model

Company Description

Pernod Ricard SA produces and sells wines and spirits worldwide. It offers its products under various brands. The company was founded in 1805 and is headquartered in Paris, France.

How the Company Makes Money

Pernod Ricard makes money through the production, marketing, and distribution of its wide range of premium alcoholic beverages. The company's revenue model is centered around selling its products to wholesalers, retailers, and directly to consumers in various markets globally. Key revenue streams include the sale of spirits, wines, and champagnes, with significant contributions from its flagship brands. Pernod Ricard also benefits from strategic partnerships and acquisitions that expand its brand portfolio and market reach. Additionally, the company invests in marketing and brand development to maintain and grow its market share, leveraging its extensive distribution network and strong brand recognition to drive sales.

Pernod Ricard Financial Statement Overview

Summary

Pernod Ricard exhibits strong profitability and operational efficiency, with stable leverage and adequate equity structures. However, recent declines in revenue and cash flow growth highlight areas of concern. Continued focus on managing leverage and improving cash generation will be crucial for sustained financial health.

Income Statement

Pernod Ricard's revenue has shown volatility, with a recent decline from 2023 to 2024. Despite this, the company maintains strong profitability, evidenced by its high gross profit margin of 60.1% and a solid net profit margin of 12.7% for 2024. EBIT and EBITDA margins are also robust at 23.5% and 27.5%, respectively, indicating efficient operational management. However, the recent revenue contraction highlights a potential risk in sustaining growth.

Balance Sheet

The balance sheet shows a stable financial structure, with a Debt-to-Equity ratio of 0.86, suggesting moderate leverage. The Return on Equity (ROE) stands at 9.4%, indicating moderate returns for equity holders. The equity ratio is 40.2%, reflecting a balanced asset financing strategy. However, the increase in total debt over the years points to potential risks if not managed prudently.

Cash Flow

Cash flow analysis reveals a decrease in free cash flow from 2023 to 2024, with a negative free cash flow growth rate of -28.3%. The operating cash flow to net income ratio of 1.17 indicates a satisfactory conversion of earnings to cash. However, the free cash flow to net income ratio of 0.65 suggests room for improvement in cash generation relative to profits.

Breakdown	TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	11.18B	11.60B	12.14B	10.70B	8.82B	8.45B
Gross Profit	6.67B	6.97B	7.25B	6.47B	5.29B	5.09B
EBITDA	2.86B	3.19B	3.75B	3.33B	2.63B	2.61B
Net Income	1.10B	1.48B	2.26B	2.00B	1.30B	329.00M
Balance Sheet
Total Assets	39.80B	39.19B	37.68B	36.01B	32.15B	31.52B
Cash, Cash Equivalents and Short-Term Investments	1.92B	2.68B	1.61B	2.53B	2.08B	1.95B
Total Debt	13.94B	13.62B	11.87B	11.17B	9.60B	10.41B
Total Liabilities	22.16B	22.39B	20.96B	19.76B	17.07B	17.31B
Stockholders Equity	16.54B	15.75B	15.72B	15.94B	14.83B	13.97B
Cash Flow
Free Cash Flow	1.09B	954.00M	1.33B	1.79B	1.57B	816.00M
Operating Cash Flow	1.84B	1.73B	2.03B	2.29B	2.00B	1.18B
Investing Cash Flow	-773.00M	-676.00M	-1.73B	-1.20B	-486.00M	-939.00M
Financing Cash Flow	-1.08B	-209.00M	-1.12B	-683.00M	-1.41B	795.00M

Pernod Ricard Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 86.02
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:RI, the sentiment is Negative. The current price of 86.02 is below the 20-day moving average (MA) of 88.63, below the 50-day MA of 92.38, and below the 200-day MA of 104.28, indicating a bearish trend. The MACD of -1.80 indicates Positive momentum. The RSI at 35.19 is Neutral, neither overbought nor oversold. The STOCH value of 9.23 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:RI.

Pernod Ricard Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RI	63 Neutral	€21.61B	19.72	6.70%	5.46%	-3.68%	-45.85%
Sector *	53 Neutral	C$4.43B	3.69	-22.83%	4.63%	8.13%	2.00%
0MV6		€559.14M	11.80	7.71%	2.22%	―	―
0DQP		€343.42M	36.54	4.63%	―	―	―
0O33		€597.37M	20.70	9.31%	3.68%	―	―
0MGU		€2.23B	18.51	6.42%	4.68%	―	―
0J7D		€103.00M	110.68	0.22%	7.02%	―	―