French supermarket group Carrefour announced on Tuesday the acquisition of French convenience retailer Magne, which owns 101 stores in the south-east of France.
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Carrefour shares fell sharply on Thursday after the French retailer sounded a note of caution on consumer demand and said it expects only "slight" growth in free cash flow and earnings before interest and tax in 2025.
Carrefour, one of Europe's largest supermarket chains, and Lagardère Travel Retail, one of the world's biggest airport retailers, have partnered to establish approximately 150 food stores in train stations across France by 2030.
Carrefour is undervalued with a P/E of 7-8x, offering a conservative upside and a 6% yield, making it a compelling buy. Despite risks like higher costs and a fragmented market, Carrefour's European consolidation and omnichannel efforts are underestimated by the market. Carrefour's 2024 targets and 2026E plan show growth in EBITDA, recurring income, and free cash flow, with significant share buy...
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Carrefour's shares have dropped 17% in the past year, presenting a buying opportunity with a free cash flow yield of 32%. The company has a strong balance sheet, with manageable debt levels and an investment-grade credit rating from S&P and Fitch. Future growth plans include expanding private brands, e-commerce, and cost reductions, though execution remains a key risk.
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