Alcoholic beverages company Stock Spirits Group PLC (LON:STCK) (STCK.L) has released third quarter results today. The Eastern European focused company has been able to grow volume by 2.8% in the 12-month period to September 2018 versus the same period of the previous year.
Revenue increased by 6.9% at constant currency, while operating profit moved 16.8% higher. It was able to record a solid share and value growth in Poland, which was led by premium brands. Its investment in premium products in Czech Republic provided resilience during the period.
Stock Spirits was able to start distribution of The Dubliner and The Dublin Liberties Irish whiskey brands across all of its markets. This built on the 25% investment in Quintessential Brands Ireland Whiskey. The company also extended its third-party distribution agreements with Beam Suntory in Czech Republic and Slovakia.
The company’s strategy of focusing on premium brands and digital growth seems to be working well. It is allowing it to connect to a greater extent with millennials, and this trend could continue over the medium term.
The headwinds experienced earlier in the year in the Czech Republic appear to have been combatted in the third quarter, with its programme of investment seeming to be catalysing its overall financial performance.
In the current year, Stock Spirits is expected to post a rise in EPS of around 8%. It trades on a P/E ratio of 13, which suggests to me that it may offer good value for money at the moment relative to its beverages sector peers.
As a result, I’m relatively optimistic about its long-term prospects. I feel that it lacks the diversity and strength of some of its industry peers, and is therefore not my preferred option within the sector. But with its performance seemingly improving and it having a relatively low valuation, I believe that its risk to reward ratio may be somewhat appealing.