Elders Limited - One for your Watchlist
Analysts have called this 'The Berkshire Hathaway of Agriculture'. It is the company that can give any Agricultural Start Up hope that you can build a massive and successful Ag Company in Australia. Elders Limited (ELD) is a major Australian agribusiness company with a rich history and a strong presence in the agricultural sector. Recently, they made a strategic decision to exit the live export business, which was a loss-making venture. This move is viewed positively as it frees up working capital for higher-returning areas within the business.
Over the past four years, Elders has undergone a significant transformation under new management. This turnaround is evident in the company's robust financial performance and its 25-30% market share in its core operations. Elders operates a marketplace model, offering a range of products and services to farmers, including fertilizer, rural supplies, livestock agency, and financial services. This model has proven to be successful, leading to impressive margin expansion and growth of over 15% per annum. Elders has a clear growth strategy, which involves making strategic acquisitions and expanding its distribution network. The company adheres to a strict 20% internal rate of return (IRR) hurdle for acquisitions, ensuring that investments are financially sound and contribute to overall profitability.
Cyclical Factors and Market Position
While the agricultural sector is subject to cyclical factors such as drought and fluctuating commodity prices, Elders has a strong market position and a diversified business model that helps mitigate these risks. The company's robust balance sheet and access to capital allow it to weather downturns and make strategic investments during challenging times.
Future Outlook
The outlook for Elders remains positive, with analysts expecting continued growth and improved profitability in the coming years. The company's strong market position, diversified business model, and disciplined financial management are key drivers of its success.
Elders Limited presents an attractive investment opportunity due to its strong fundamentals, growth potential, and attractive valuation. With a current share price trading at a discount to its intrinsic value, investors have the potential to benefit from significant upside in the long term As long as a good Successor to the trusted leader Mark Allison is named, The sheer Diversity that Elders provides gives an alternative stock to an investors portfolio
Elders Limited is a well-established agribusiness company with a proven track record of success. The company's strategic decision to exit the live export business, coupled with its strong market position and disciplined financial management, makes it a compelling investment opportunity with significant growth potential.
Disclaimer Author owns shares in this
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