Should I buy this FTSE 250 stock after excellent interim results released today?

This FTSE 250 food business released great results earlier, and now our writer examines whether buying the shares could be a smart move.

| More on:
Young Asian man drinking coffee at home and looking at his phone

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Sumayya Mansoor has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

pensive bearded business man sitting on chair looking out of the window
Investing Articles

The Dr. Martens share price just crashed 25%! Time to buy?

The Dr. Martens share price has plummeted. Is this an opportunity for our writer to add the stock to his…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

Dr. Martens: is this collapsing FTSE 250 stock now a contrarian buy?

Shares of this well-known FTSE 250 firm just dropped to a record low following a poorly received report. Is this…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

Why I’d start putting money into dirt cheap UK shares this December

Our writer isn't waiting until the New Year to consider opportunities for his share portfolio. Here are some reasons why…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

What are the best shares to buy in December for 2024?

Christopher Ruane explains why he's not waiting until 2024 to make moves in the stock market and would be happy…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

£5k of savings? I’d target income of £7,544 a year by investing in just 3 dividend shares

I'm building a portfolio of dividend shares to give me a passive income in retirement. It's astonishing how the rewards…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

One dividend giant I’d buy over Aviva shares

Aviva shares still look a good buy to me, but I think right now another high-yielding dividend stock looks even…

Read more »

Newspaper and direction sign with investment options
Investing Articles

I would grab these cheap shares before prices rise again

With the UK market in a slump, this Fool UK contributor is looking at buying up some cheap shares before…

Read more »

Girl buying groceries in the supermarket with her father.
Investing Articles

Down 55% since 2007, can the Tesco share price turn around?

The Tesco share price has fallen by more than half in recent decades. Our writer explains whether the stock has…

Read more »