DISCLAIMER: This isn’t funding recommendation. PLEASE DO YOUR OWN RESEARCH !!!
Abstract
On this replace put up, I take a look at two of my French inventory positions, STEF SA and Gerard Perrier. For STEF, I diminished my place by 1% of the portfolio due to issues with the mixing of newly acquired firms. In distinction, I elevated my Gerard Perrier place by 1,5% of the Portfolio as enterprise is accelerating they usually appear to have made some excellent acquisitions within the Protection/Aerospace and Digital house.
STEF SA
Stef is an organization that I analyzed and wrote about 2 years in the past. In essence, I thought-about it an affordable however dependable infrastructure-like cold-storage firm with a fantastic observe file that’s consolidating a number of European markets. For such a “compounder”, the worth seemed very low cost at round 8xP/E.
Nevertheless, issues turned out a bit in a different way than I believed. Whereas 2024 was a bit bit weaker than 2024, 2025 noticed a big decline in EPS to a degree of lower than 50% of the 2023 earnings.
In accordance with the 2025 investor presentation, this was a mix of one-time results (Tax France, VAT Italy) and slower than anticipated integration success in its current acquisitions.
To my very own discredit, I didn’t comply with up on the 6M gross sales launch from STEF which nonetheless seemed good. I ought to have seemed on the full half yr report as a substitute.
That is how the clarify the declin:
Additionally, internet debt elevated by 200 mn.
The dividend was reduce to 2,70 EUR from 4,15 EUR the yr earlier than (and 5,10 EUR in 2023). That is comprehensible from an organization perspective however considerably unlucky for traders.
Analyst estimates appear to anticipate a restoration in 2026 and the next years in keeping with TIKR:
Share value smart, the inventory is sort of precisely the place it was once I wrote up STEF. Apparently the US friends did a lot worse:
A fast look into Americold’s 2025 press launch reveals decliningorganic gross sales and point out of “speculative developments” within the chilly storage trade.
Additionally Lineage reported declining gross sales in 2025.
Each US friends are extraordinarily extremely leveraged (8x EV/EBITDA) and subsequently very susceptible to damaging financial developments. Nevertheless, additionally STEF’s internet debt to EBITDA ratio elevated from 2,5x in 2023 to three,5x in 2025. Nonetheless manageable but when rates of interest enhance, this can symbolize one other headwind for them.
My conclusion at this stage is that Stef clearly has over-extended itself with its acquisitions within the neighbouring international locations and has not been in a position to combine them efficiently thus far.
Administration mentions that issues ought to “normalize” in 2026 and Q1 income seemed okay, however expertise reveals that the total integration of the newly acquired firm can take way more time.
Though I’m not able to throw within the towel but, I do assume that my preliminary 5% allocation (at present 4,5%) was too excessive and diminished the place by 1% of the portfolio to ~3,5%.
The constructive facet of this story is clearly that I purchased low cost sufficient which protected me in opposition to a big lack of invested capital.
Gerard Perrier
On the floor, Gerard Perrier is a bit bit just like Stef insofar as 2025 was a yr when earnings went down barely:
Regardless of nonetheless rising gross sales, EPS was -8% decrease than in 2024. 2024 once more was roughly unchanged from 2023.
In Gerard Perrier’s case nonetheless, the reason will not be that they didn’t combine new acquisition however a temporal weak point of their Vitality section which includes largely the servicing of the French nuclear fleet.
That is the interpretation (from Gemini) from G. Perriers report:
“The exercise of the Vitality division (ARDATEM, TECHNISONIC), which incorporates companies for the nuclear sector, noticed its manufacturing lower by 8.2%, falling from €89.8 million to €82.4 million. This slowdown is especially defined by the transitional impact of the discount in reactor outages and upkeep actions at energy crops this yr, in addition to by a rationalization coverage of nuclear operations in France, though the sector stays on a constructive dynamic within the medium time period.”
As well as, even with out a lot progress within the Vitality section thus far, G. Perrier had a fantastic begin into 2026 with gross sales up by +10% yoy:
As we are able to see, particularly the “Set up Upkeep” and the Aerospace/Protection segments are doing properly.
What I discovered attention-grabbing is that there was nearly no response to this information within the share value:
What I do like is that their current acquisitions look very attention-grabbing. With N-Cyp they acquired a small specialist firm for industrial cyber protection, with OFATEC they get entry to the Knowledge Heart market and with the acquisition of the three firms AQLE, SOMALEC et SOMALEC SUPPLY they strengthened their protection/aerospace section, together with elements for the Ariane Area missile program.
One other information level that I discovered attention-grabbing is that G. Perrier has nonetheless round 230 open positions as per their web page:
A lot of the jobs are open at Ardatem (137), the Nuclear service firm, which appears to indicate that they anticipate much more work going ahead.
General, I do assume that Gerard Perrier provides a really engaging return/danger profile particularly on the premise of the at present accelerating enterprise numbers, subsequently I elevated my place from a earlier 3,5% weight to five% of the portfolio. The extra 1,5% have been purchased at a mean value of round 83 EUR per share.
