José Benito de Vega | In the last twelve months, the Spanish firm Vidrala has had a better stock performance than the IBEX35, with a revaluation of 1% compared to a decrease of 8% in the index, although the stock has not been spared from moments of volatility.
Vidrala is one of the largest European companies in the glass packaging sector. It belongs to a defensive sector, with high entry barriers and a moderate but constant growth, which is taking advantage of a change in consumer habits, a most restrictive legislation against the use of plastic and also because glass is difficult to replace.
The firm offers an attractive history of earnings growth, surpassing analyst consensus estimates quarter after quarter thanks to its operating leverage and its ability to raise prices.
After its latest acquisition in 2017, it has resumed its leverage reduction path thanks to its proven cash generation capacity, which will be even higher after 2019, due to the lower investment needs. Currently it is trading at a premium of around 20% (PER20E 15.8x and EV / EBITDA20E 9.75x) against the sector, which would be justified by the higher growth in profits, greater cash generation capacity and its process of reducing indebtedness.
We would take advantage of moments of weakness in the market, which may be motivated by the increase in the risk premium or the uncertainty about the trade war between China and the United States to build a position with a medium / long-term vision.
