Every day, I take a look at the biggest FTSE share price movements – up and down. When it comes to the winners, I don’t expect the stocks in my portfolio to appear. Most of my investments are in FTSE 350 companies, whose share prices tend to be more stable, with large daily upwards movements being rare.
Fortunately, this means my stocks usually don’t appear in the list of fallers either. But I’m realistic enough to know there are never any guarantees when it comes to investing in the stock market.
However, it’s the losers that continue to interest me the most. That’s because — I believe — investors often over-react to bad news, sometimes sending a share price lower than is justified.
A bad day at the office
An example of this occurred on 3 September.
The share price of Hilton Food Group (LSE:HFG) tanked 17% after investors took a dislike to its interim results for the six months ended 30 June (H1 25). The company is a supplier of meat, seafood, vegan, and vegetarian foods to customers in Europe, Australia, and New Zealand.
Don’t get me wrong, I’m not saying the results were particularly impressive. After all, a 0.4% fall in adjusted operating profit, compared to the same period in 2024, isn’t what you would expect from a listed business.
In addition, the company recorded a net cash outflow of £30.8m compared to an inflow of £30m in H1 24. Also, over the past 12 months, net debt has increased by £65.4m.
A closer look
However, the company said it expects “to deliver full-year results within the range of expectations”. The consensus of analysts is for a pre-tax profit of £76.8m-£81m. It made £61m in 2024.
On this basis, I think wiping around £150m off the group’s market cap is unjustified. This is particularly the case when the increase in its net debt is explained by “increased tactical inventory holding” and additional capital expenditure. It’s not as if the group’s been wasting its surplus cash.
And it announced a 5.2% increase in its interim dividend. When added to last year’s final payout, today’s share price crash means income investors might be tempted by the stock’s healthy yield of 5.1%.
Been here before
But it’s not the first time that the group’s shareholders have suffered. In September 2022, on the day it issued a profit warning, its share price tanked 28%.
This is just one example of how investor patience has been tested in recent years. In April 2022, the shares were worth over 80% more than they are today.
A more positive view
However, I think there are plenty of reasons to consider today’s reaction by investors as a mistake.
The group’s plans to expand internationally remain on schedule. It’s due to commence trading in Saudi Arabia with a joint venture partner in the second half of 2026. And it plans to launch a new business in Canada in 2027.
And if it does meet analysts’ expectations this year, it means the stock’s trading at around 12 times forward earnings. Others in the sector, including Cranswick, Kerry Group, and Greencore Group, attract a higher multiple.
That’s why I think today’s share price movement means Hilton Food Group is a stock for investors to consider. And why I think large share price falls are worth keeping a close eye on.
