BRF SA
BOVESPA:BRFS3
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Intrinsic Value
The intrinsic value of one BRFS3 stock under the Base Case scenario is 19.75 BRL. Compared to the current market price of 24.35 BRL, BRF SA is Overvalued by 19%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
BRF SA
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Fundamental Analysis
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BRF SA, a leader in the global food industry, has established itself as a dynamic and innovative player since its founding in Brazil in 1934. Originally recognized for its premium meat products, BRF has transformed into a diversified food company that operates in over 100 countries, leveraging its well-known brands such as Sadia and Perdigão. The company’s commitment to quality and sustainability resonates with changing consumer demands, from protein sources to convenience foods, positioning BRF for growth in both emerging and developed markets. With robust supply chain management and a focus on efficiency, BRF is not just a meat processor but a comprehensive food supplier adapting to the va...
BRF SA, a leader in the global food industry, has established itself as a dynamic and innovative player since its founding in Brazil in 1934. Originally recognized for its premium meat products, BRF has transformed into a diversified food company that operates in over 100 countries, leveraging its well-known brands such as Sadia and Perdigão. The company’s commitment to quality and sustainability resonates with changing consumer demands, from protein sources to convenience foods, positioning BRF for growth in both emerging and developed markets. With robust supply chain management and a focus on efficiency, BRF is not just a meat processor but a comprehensive food supplier adapting to the varied tastes and preferences of consumers worldwide.
For investors, BRF SA represents an intriguing opportunity given its strategic initiatives aimed at expanding its market reach and enhancing operational efficiencies. The company has ambitious plans to grow its product portfolio, particularly in the processed foods segment, which will likely bolster its revenue streams. Despite facing challenges such as fluctuations in commodity prices and regulatory environments, BRF's proactive approach to innovation and sustainability helps mitigate risks while fostering long-term value creation. As the global appetite for protein continues to rise, BRF stands ready to capitalize on this trend, making it a compelling option for investors seeking exposure to the evolving food sector.
BRF S.A. is a Brazilian multinational food company known primarily for its production and distribution of protein-based products, particularly poultry and pork. The core business segments of BRF can be described as follows:
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Poultry Segment: This is one of BRF's primary business units and includes the processing and selling of chicken products. BRF is one of the largest exporters of chicken in the world, supplying both fresh and frozen chicken to various international markets.
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Pork Segment: BRF also engages in the production and distribution of pork products. This includes fresh meat, processed items, and specialty products that cater to different market needs. The pork segment complements the company's poultry operations, diversifying its protein offerings.
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Processed Foods Segment: This segment includes a range of value-added products such as frozen foods, ready-to-eat meals, and packaged meats. BRF brands, such as Sadia and PerdigĂŁo, are well-known in Brazil and are targeted towards both domestic and international consumers.
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Dairy Products Segment: Although not as large as the protein segments, BRF also produces dairy products, including cheese and dairy-based foods, which complement its overall product portfolio.
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International Operations Segment: BRF has a significant presence in international markets, exporting its products to various countries. This segment focuses on expanding BRF's footprint outside Brazil, catering to the growing demand for protein globally.
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Sustainability and Innovation: While not a traditional segment, BRF emphasizes sustainable practices in its operations, including animal welfare and environmental sustainability. Continuous innovation in products and processes is a core aspect of its business strategy.
These segments reflect BRF's strategy to be a leading player in the global food industry by offering a diverse range of high-quality protein products while focusing on sustainability and market expansion.
BRF SA, one of the world's largest food companies, particularly in the poultry and processed meat sectors, holds several unique competitive advantages over its rivals:
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Strong Brand Portfolio: BRF has a diverse and well-recognized range of brands such as Sadia, PerdigĂŁo, and Qualy. These brands benefit from high consumer loyalty and recognition in domestic and international markets.
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Vertical Integration: BRF operates a vertically integrated supply chain that allows it to control every aspect of production, from breeding and feeding poultry to processing and distribution. This integration helps in managing quality, costs, and supply chain efficiency better than competitors.
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Global Presence and Export Capabilities: The company has a significant global footprint, exporting its products to over 100 countries. This not only opens up vast market opportunities but also hedges risks associated with domestic market fluctuations.
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Innovative Product Development: BRF invests considerably in research and development, allowing the company to innovate and introduce new products that cater to changing consumer preferences, including health-focused and convenience foods.
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Sustainability Practices: BRF is increasingly focusing on sustainability and responsible sourcing, which appeals to environmentally conscious consumers and helps differentiate it from competitors that may not prioritize these aspects.
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Economies of Scale: Being one of the largest players in the industry enables BRF to achieve economies of scale, reducing production costs per unit and allowing for competitive pricing strategies.
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Strong Distribution Network: BRF has developed an efficient and extensive distribution network that ensures its products are readily available in various markets, both locally and internationally.
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Financial Strength: BRF's robust financial position enables it to invest in growth opportunities, whether through acquisitions, expanding production capacity, or entering new markets, which can be challenging for smaller competitors.
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Quality Assurance: The company places a strong emphasis on quality controls throughout its production process, which can enhance customer trust and brand integrity.
These competitive advantages, when effectively leveraged, can help BRF SA maintain its market leadership and further expand its reach in the global food industry.
BRF SA, one of the largest food companies in Brazil and a significant player in the global poultry and processed meat markets, faces several risks and challenges in the near future:
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Market Competition: The food processing industry is highly competitive, with both domestic and international players. Increased competition can lead to price wars, reduced margins, and loss of market share.
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Regulatory Environment: BRF operates in multiple countries, each with its own regulatory frameworks. Changes in food safety, quality regulations, and import/export restrictions can impact operations and profitability.
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Supply Chain Disruptions: The company relies on complex supply chains for raw materials such as poultry and pork. Disruptions due to pandemics, natural disasters, or geopolitical tensions can affect production and costs.
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Economic Instability: Economic fluctuations, particularly in Brazil, can impact consumer purchasing power and demand for BRF's products. Inflation rates, changes in currency exchange rates, and economic downturns are critical factors to consider.
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Sustainability Concerns: There is a growing consumer demand for sustainable and ethically sourced food. BRF may face pressure to ensure that its practices meet these expectations, which can require significant investment.
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Health Trends: Increasing consumer awareness of health and wellness can affect demand for processed and red meats. BRF may need to diversify its product offerings to align with changing dietary preferences.
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E-commerce and Technology Integration: Rapid changes in retail channels and technology can pose risks if BRF cannot adapt quickly, particularly in digital marketing, distribution strategies, and consumer engagement.
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Foreign Exchange Risks: As a company operating internationally, BRF is exposed to currency fluctuations that can affect the pricing of goods and overall profitability.
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Labor Relations: Labor disputes or strikes can disrupt operations and negatively impact productivity. Relationships with labor unions and compliance with labor laws are critical.
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Public Perception and Brand Reputation: Any negative publicity related to product recalls, food safety issues, or environmental impacts can severely affect consumer trust and sales.
To navigate these challenges effectively, BRF SA will need to implement strategic planning, risk management practices, and innovative approaches to maintain its competitive edge in the marketplace.
Revenue & Expenses Breakdown
BRF SA
Balance Sheet Decomposition
BRF SA
Current Assets | 29.1B |
Cash & Short-Term Investments | 11.9B |
Receivables | 7.3B |
Other Current Assets | 9.8B |
Non-Current Assets | 32.7B |
Long-Term Investments | 1.2B |
PP&E | 16.7B |
Intangibles | 6.5B |
Other Non-Current Assets | 8.3B |
Current Liabilities | 20.1B |
Accounts Payable | 12.9B |
Accrued Liabilities | 1.8B |
Other Current Liabilities | 5.3B |
Non-Current Liabilities | 26B |
Long-Term Debt | 23.1B |
Other Non-Current Liabilities | 2.9B |
Earnings Waterfall
BRF SA
Revenue
|
56.5B
BRL
|
Cost of Revenue
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-43.7B
BRL
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Gross Profit
|
12.8B
BRL
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Operating Expenses
|
-8.4B
BRL
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Operating Income
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4.4B
BRL
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Other Expenses
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-2.5B
BRL
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Net Income
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1.9B
BRL
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Free Cash Flow Analysis
BRF SA
BRL | |
Free Cash Flow | BRL |
In Q2 2024, BRF achieved its best second quarter ever with a 22.3% increase in revenue and an EBITDA of BRL 2.6 billion, reflecting a margin of 17.6%. Net income reached BRL 1.1 billion and free cash flow touched BRL 1.7 billion. Significant sales growth was seen both domestically and internationally, with processed products driving much of the success in Brazil. The company's efficiency program, BRF+ 2.0, contributed BRL 374 million in savings. International market margins hit a nine-year high, supported by price recovery and diversification. CEO Miguel Gularte emphasized the ongoing focus on high performance and market expansion.
What is Earnings Call?
BRFS3 Profitability Score
Profitability Due Diligence
BRF SA's profitability score is 41/100. The higher the profitability score, the more profitable the company is.
Score
BRF SA's profitability score is 41/100. The higher the profitability score, the more profitable the company is.
BRFS3 Solvency Score
Solvency Due Diligence
BRF SA's solvency score is 37/100. The higher the solvency score, the more solvent the company is.
Score
BRF SA's solvency score is 37/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
BRFS3 Price Targets Summary
BRF SA
According to Wall Street analysts, the average 1-year price target for BRFS3 is 24.85 BRL with a low forecast of 19.19 BRL and a high forecast of 32.34 BRL.
Dividends
Current shareholder yield for BRFS3 is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
Country
Industry
Market Cap
Dividend Yield
Description
BRF SA engages in the production and distribution of fresh and frozen protein foods. The company is headquartered in Itajai, Santa Catarina and currently employs 100,000 full-time employees. The firm's segments include Brazil, Latin America (LATAM), Middle East and North of Africa (MENA), Africa and Other Segments. These segments include sales of all distribution channels and operations subdivided in to poultry, pork and other, processed, and other sales. The poultry operations include the production and sale of whole poultry and in-natura cuts. The pork and other operations involve the production and sale of in-natura cuts. The processed operations include the production and sale of processed foods, frozen and processed products derived from poultry, pork and beef, margarine, vegetable and soybean-based products. The other sales operations include the commercialization of flour for food service and others. Other segments include sale of in-natura beef cuts, agricultural products and animal feed.
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The intrinsic value of one BRFS3 stock under the Base Case scenario is 19.75 BRL.
Compared to the current market price of 24.35 BRL, BRF SA is Overvalued by 19%.