We like Carrefour here (Strategy & Management) and as the biggest part of move on Eur$ is done now, I don't think that this will continue to be a catalyst for Delhaize, improving Growth data in Europe could continue to help Europe focus to do better short term than US one...we could see at least a 5% performance ont his spread...if we break the long trend on the spread could see much bigger Carrefour Outperformance... wathch the full note attached.
>>> Carrefour
I. The success of the Plassat’s action plan:
1) Carrefour is up 47% since its nomination.
2) For year 2014 results was up 3,9% and EPS still increasing.
3) Moulin family increased its stake in Carrefour because of its confidence to the Plassat’s strategy.
4) Abilio Diniz wants to rise its stake in the Brazil Carrefour branch after acquiring 10% of the capital.
II. We continue to believe Carrefour is undervalued:
1) One of the best momentum in the sector.
2) Guidance was confirmed and we expect a good development in Plassat’s strategy (Carmila, Dia, on-line sales and emerging markets).
3) A full break up of its operations could be an upside.
4) Brazil continue to trade well (57 stores opening in progress, sales growth increased) and we expect an IPO for the Brazil branch this year.
5) Carrefour trades on P/E at 16.3 x, 10% discount to the sector and below its historical P/E.
>>> Delhaize
1) Delhaize enjoyed a stronger USD.
2) The Q4 strong results has been already priced.
II. We continue to believe Delhaize is overvalued:
1) Belgium market disappointed (market share down and strikes not resolved and doesn't appear reachable immediatly).
2) The growth was driven by the strenghtening of the USD and the growth in the US.
3) Q4 2014 operating margin was lower than expected.
4) Delahize trades on a P/E at 15.9x, above its historical P/E.