Shares in this £45bn-FTSE 100 firm rarely look cheap. But, as I’ll explain, I think they could make an excellent choice for a retirement investment portfolio.

Turning the corner

Reckitt’s brands include Dettol, Durex, Nurofen and Gaviscon. It operates in more than 60 countries and has a history stretching back to 1819. So it’s easy to see how the firm’s products are part of the fabric of life for many millions of people.

Despite this, the firm has faced some challenges over the last year, including a costly cyber-attack and problems with its Scholl foot care business. These now appear to be in the past.

Today’s half-year figures looked very good to me. Like-for-like sales were 4% higher at constant exchange rates, compared to the same period last year. Total sales rose 23% to £6,138m, thanks to the contribution from last year’s acquisition of infant formula business Mead Johnson.

This strong result was reflected in the group’s profits. Operating profit rose by 29% to £1,286m, excluding the impact of exchange rates. This gave an operating margin of 23.6%, broadly unchanged from the same period last year.

Why I’d buy

Reckitt’s high margins help the group to generate high levels of free cash flow. When this is combined with  stable, long-term sales of its core products, the result is a business which can deliver solid earnings and dividend growth over many years.

The shares look fully priced on a forecast P/E of 20.5. But the group’s dividend is consistently covered by free cash flow and the payout has doubled since 2008. So today’s forecast yield of 2.7% could be a very good starting point for a reliable, growing income. I’d be happy to buy the shares for a long-term, buy-and-hold portfolio.

Are you looking for capital gains?

Reckitt shares have tripled since 2006. But they’re not as cheap as they once were and future gains may be slower.

One company where investors are hoping for a significant share price rise is Premier Foods (LSE: PFD), which owns brands such as Mr Kipling, Batchelors and Bisto. This firm has struggled under a massive debt load that’s seen its shares fall from more than £20 in 2007 to just 42p today.

However, the group’s net debt is gradually falling. And trading appears to be improving. During the first half of this year, sales rose by 4.5%, helped by a 10% increase in sales of non-branded products made for supermarkets and other customers.

Investors are feeling more confident that chief executive Gavin Darby can deliver on forecasts for modest earnings growth and debt reduction of £25m per year. With the shares trading on just 5 times forecast earnings, there’s scope for re-rating here as debt levels fall.

It’s worth remembering that in April 2016, Premier rejected a proposed takeover offer at 65p per share — 55% above the current share price of 42p. The shares may be worth considering as a speculative turnaround.

The post Why FTSE 100 dividend stock Reckitt Benckiser could give you a comfortable retirement appeared first on The Twelfth Magpie.

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• I’m hunting for the FTSE 100’s best value stocks to buy now. Have I found one?
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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With that in mind, here are two under-the-radar value stocks that might help you do just that.

On a roll

Cineworld (LSE: CINE), which recently completed a transformative deal to buy US cinema chain Regal Entertainment Group, is one stock that deserves more attention than it currently gets. After a strong run in its share price since the end of the last recession, it has since pulled back to trade at 18% below its 52-week high of 327p.

Against the disappointing share price performance, Cineworld’s recent trading performance shows that it is on a roll. Revenues for the cinema chain increased by 6.7%, in constant currency terms, for the period between the start of 2018 and 13 May, as ticket sales grew by 6.1% on the previous year.

And amid weak consumer confidence in the UK, Cineworld’s expansion into the US market has helped to lessen the impact of a weaker performance in the UK market, as a 10.2% increase in revenues from the US had more than offset a 2.1% decline in the UK and Ireland.

Bullish catalysts

Looking ahead, the company looks set to benefit from a series of bullish catalysts. Cost synergies from its Regal acquisition are expected to yield $100m in annual pre-tax savings, while there are also growth opportunities through venue refurbishments and better marketing to boost revenues.

And for the near-term, there’s a promising set of blockbusters due for release in the second half of the year, including Deadpool 2, Solo: A Star Wars Story and Jurassic World: Fallen Kingdom, which could give an extra uplift for its upcoming full-year results.

Despite all this, valuations are undemanding with Cineworld shares trading at a forward P/E of 14.8.

Low multiples

Another stock trading at low multiples on forward-looking earnings is Premier Foods (LSE: PFD). The company, which owns well-known food brands including Bisto, Batchelors, Mr Kipling and Loyd Grossman sauces, trades at just 5.4 times its adjusted earnings for the coming year.

This is in spite of improving sales growth and a shrinking debt burden at the company. On Tuesday, Premier Foods said its pre-tax profits for the 52-weeks to 31 March increased by 74%, as revenue growth hit its fastest pace for more than five years.

The company’s upbeat trading performance showed that it has made a strong start with new product launches and reflected healthy grocery retailing conditions, in contrast to weak consumer spending elsewhere.

Mixed picture

Looking ahead, the picture is mixed. Although the company’s financial performance has improved considerably in recent years, there’s a great deal of uncertainty going forward. Premier Foods is highly exposed to the UK retail market at a time when consumer spending has started to decline. What’s more, with supermarkets under pressure to cut costs, I’m concerned that a potential squeeze on margins could hurt its earnings recovery.

On the other hand, with valuations where they are, many of these risks appear to have been already baked into its share price.

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Jack Tang has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The Mr Kipling and Bisto manufacturer advised that revenues rose 4% during the 13 weeks to December 30, to £261.4m, indicating a healthy sales improvement in recent months. Sales rose 2.6% during the nine months to end-December, Premier Foods advised.

In particular the St Albans company paid tribute to its tie-ups with Nissin Foods and Mondelez International, which both contributed strongly to sales growth in the period. Premier yesterday talked down recent media speculation that it was about to sell its Batchelors noodles division to Nissin.

What’s more, today’s release underlined the terrific brand power that Premier carries, the business having seen its market share improve across six of its eight key brands during April-December.

Grab a slice

Now Premier has been the subject of significant earning slides in recent years but, thanks to the impact of massive restructuring, the business is finally expected to put together a period of sustained profit improvements.

City analysts are forecasting an 8% bottom-line rise in the year to March 2018, and another 6% advance is forecast for the following period.

It still faces a difficult backdrop for the grocery market in Britain that could see current earnings estimates take a hit. And of course the firm’s debt mountain also remains a concern, but it today affirmed its belief that net debt will fall year-on-year during the current fiscal period.

Having said that, many investors would consider the company’s ultra-low forward P/E ratio of 5.3 times — well below the bargain watermark of 10 times — to more than reflect the likelihood of downgrades to profits forecasts.

And with sales in international markets continuing to go from strength to strength as overseas sales exploded 26% in the last quarter, now could prove a canny time for long-term investors to take a slice of the company.

Cleans up nicely

Those looking for another brand beauty with solid earnings potential may want to look at PZ Cussons (LSE: PZC) too.

The FTE 250 giant spooked investors last month after it advised that operating profit during June-November would fall 10% year-on-year as tough economic conditions and competitive pressures in Europe and Africa offset strong profitability in Asia.

However, Cussons added that performance in these divisions is likely to improve during the second fiscal half thanks to “new product launches and distribution expansion, together with the usual seasonal uplift in Nigeria.”

Indeed, I am confident that range expansions across beloved brands, from Imperial Leather soaps and bath products to Original Source shower gels, should help Cussons’ bottom line recover very soon. City analysts, who are forecasting a 2% earnings drop for the 12 months to May 2018, agree with my viewpoint, and expect the household goods giant to fire back with an 8% increase in fiscal 2019.

And in the long run I am confident Cussons’ emphasis on emerging markets should deliver significant returns as rising disposable income levels there bolster demand for the manufacturer’s wares. I reckon the firm remains a top buy today despite its slightly-toppy forward P/E ratio of 20 times.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of PZ Cussons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Set against this is a current absence of evidence of large-scale commercial viability and the fact that the price of the most recent trading of interests between companies operating in the Weald would seem to give an implied value to UKOG’s acreage of a fraction of its £173m market cap.

Operating and financing update

The company’s shares were volatile in early trading this morning, after it released an operating and financing update. The news wasn’t good from flow testing the lowest depths of its Broadford Bridge well, the company concluding that “sustained commercial flow rates … could likely only be obtained via reservoir stimulation beyond the scope of its existing regulatory permissions.”

In the other part to the update, UKOG said it has secured a £10m financing package. It said it’s “now fully funded to deliver planned drilling and testing programme through 2018.” The funding deal might sound good to people who are unfamiliar with the kind of financing announced. However, mentions of 0% interest, a share price of 8p and a prohibition on the provider of the loan holding a net short position in UKOG are red herrings.

The terms of the deal put it in the class of what is colloquially called ‘death spiral financing’. The lender is in a position to make a high and almost risk-free return, without holding a net short position, but the mechanics of which lead to a slowly collapsing share price and accelerating dilution of existing shareholders. I previously had UKOG marked as a stock to avoid for various reasons. But adding to those reasons the type of financing announced today, I can only rate it a ‘sell’.

Big brands but big debt

With business partners and institutional investors having substantial shareholdings and debt in the form of conventional loan notes and bank facilities, Premier Foods (LSE: PFD) has the kind of backing that’s signally absent at UKOG. Its shares are trading up around 7% today at 39p after it released encouraging half-year results.

This owner of a strong portfolio of brands, including Batchelors, Homepride and Mr Kipling, is valued at £327m. The big issue with the company, which is trading at just 4.9 times forecast earnings, is the high level of debt still weighing on it after historically over-extending itself with acquisitions. It today reported a £21m reduction in net debt but at £535m it remains an onerous burden. For example, first-half operating profit of £22m was entirely wiped out by net financing costs of £24m.

I see Premier as a stock to avoid purely because of this high level of debt. However, the business and brands are attractive and a takeover by a bigger company with deeper pockets is possible. Premier received an indicative offer at 65p a share in March  last year, although I wouldn’t want to invest simply on the basis that a new bid might come in at some point.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

For the year to March 2018 Premier Foods is predicted to report a 10% profits improvement, and to follow this with an extra 6% improvement in fiscal 2019.

And such projections should make the St. Albans-based business an appetising pick for value chasers. Not only does the company carry a prospective P/E rating of 5.2 times – a long way below the widely-regarded bargain benchmark of 10 times – but it also boasts a corresponding sub-1 PEG reading of 0.5.

Turning the corner

Now don’t get me wrong: the Mr Kipling cakes and Ambrosia custard manufacturer is not out of the woods yet. With pressure on UK shoppers’ wallets rising thanks to increasing inflation and stagnating wages, Premier Foods may struggle to see a meaty uptick in sales any time soon.

Indeed, the company saw total sales drop 3.1% during the 13 weeks to July 1st, a result it said was “primarily due to lower sales volumes in the grocery categories, notably desserts.” However, the strength of its much-loved labels helped Premier Foods to continue outperforming the market in the period, and it expects these products to help it return to growth in the current quarter.

With the company’s cost-cutting programme also making huge strides, and overseas demand for its treats also marching higher (international sales rocketed 20% in the last quarter), I reckon Premier Foods could prove a very pleasing growth pick in the years ahead.

Close in on a dividend star

I also reckon Close Brothers Group (LSE: CBG) is worthy of proper attention at current prices.

In the year to July 2017, the Square Mile’s battalion of brokers expect the merchant banking specialist to report a mere 1% earnings improvement, followed by an even more fractional rise forecast for the current year.

These estimates still leave the FTSE 250 star dealing on a hugely-undemanding P/E rating of 11.6 times for fiscal 2018. And Close Brothers should come as a particularly attractive investment destination to income seekers.

For the last year a total dividend of 60.1p is anticipated, up from 57p in fiscal 2016. And this is expected to keep moving upwards with a 62.4p payout predicted for the current period, meaning the firm sports a brilliant 4.1% yield.

Moreover, share pickers can also take confidence in the company meeting these dividend projections, with coverage standing at a robust 2.1 times, above the broadly-considered security yardstick of 2 times.

The London firm’s broad suite of financial services remain in popular demand, and it reported in July that the loan book at its Banking division had grown 6.4% in the 11 months ending June, to £6.8bn.

Close Brothers’s Property Finance and Retail Finance arms also performed strongly in the period, while strong net inflows and favourable market movements helped its Asset Management operations rise 9% to £8.8bn.

Given the terrific momentum the business is enjoying across the board, I reckon Close Brothers is a solid pick for both growth and value investors.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Low valuation

Reporting on Thursday was food and beverage manufacturer Premier Foods (LSE: PFD). The company reported a quarterly update which was generally in line with expectations. Sales in the first quarter of the year were 3.1% lower than in the same quarter of the previous year, although the business has managed to deliver market share gains in Grocery and Sweet Treats. It has been able to do so despite a competitive environment, with the company recording outperformance relative to its industry peers.

Encouragingly, Premier Foods reported a rise in international sales of 20%, which is its 11^th successive quarter of growth. The first new products from the Nissin strategic relationship have now delivered over £3m of retail sales, while the company’s expectations for the full year remain unchanged.

Looking ahead, Premier Foods is expected to report a rise in its bottom line of 9% this year, followed by further growth of 5% next year. This puts it on a price-to-earnings growth (PEG) ratio of just one, due in part to a single-digit price-to-earnings (P/E) ratio. Clearly, the company is not particularly popular among investors at the present time. This could present a buying opportunity for long term investors seeking a wide margin of safety.

Improving outlook

Also offering capital growth potential within the consumer goods sector is PZ Cussons (LSE: PZC). The diversified consumer products business has endured a rather challenging period in recent years, with its key Nigerian market experiencing economic difficulties. This has negatively impacted on demand for the company’s products and caused a pullback in its financial performance.

While the situation in Nigeria is not fully recovered from an economic standpoint, the country nevertheless provides a stunning growth opportunity for the business. Rising wealth could lead to higher demand for premium consumer products such as those sold by PZ Cussons. And with the rest of its business performing well after a number of successful product launches, it continues to offer upside potential.

Although the company’s bottom line is forecast to rise by just 6% in each of the next two years, this nevertheless represents a turnaround. More growth looks likely in the long run and with PZ Cussons trading on a P/E ratio of 20.4, it seems to offer good value for money when compared to its sector peers. As such, while continuing to be a relatively volatile investment, it could prove to be a highly profitable opportunity.

The post 2 bargain stocks you probably haven’t considered appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Premier Foods. The Motley Fool UK owns shares of PZ Cussons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The Mr Kipling manufacturer saw underlying sales slip 1.4% during the year ending March 2017 to £790.4m, while adjusted pre-tax profits dived 11.8% to £74.2m.

As a result, chief executive Gavin Darby announced a chance in approach, commenting that “with the industry changing rapidly, we have updated our strategy to give an equal focus to revenue growth, cost efficiencies and cash generation.” Premier Foods is now striving to deliver £20m worth of cost savings in the next two years.

Cheap but tasty

These measures are an essential step in addressing the inflationary environment that is causing input prices to soar. Premier Foods cited soaring values of commodities such as sugar, chocolate, wheat, palm oil and dairy products in denting profits during the past year.

And with grocers cutting promotional activity in favour of offering lower everyday prices, denting Premier Foods’ volumes, the company is aiming to reassert control in a bid to get earnings chugging higher again

Of course the business has a lot of hard yards in front of it as it battles a tough operating environment and seeks to get its efficiency programme off the ground. But with Premier Foods dealing on a forward P/E ratio of just 5.1 times (created by forecasts of an 11% earnings rebound from City brokers), I believe the stock could deliver plenty of upside at current prices.

Crude concerns

I am certainly not as compelled by the investment prospects of oil explorer Enquest (LSE: ENQ) however, even as its mighty Kraken asset prepares for first oil.

The London-based firm announced on Thursday that the North Sea project remains on track for maiden production by the end of next month following “further excellent progress on drilling.”

As a consequence Enquest stressed its confidence in meeting this year’s production and capital expenditure targets (the driller expects to pull between 45,000 and 51,000 barrels of oil equivalent out of the ground each day in 2017).

Enquest maintained its guidance even as it advised of declining production during the first four months of the year. Average production of 37,856 barrels per day between January and April was down from 42,752 barrels in the same 2016 period, a decline Enquest put down to “natural declines in the existing producing assets.”

Undoubtedly Enquest carries boatloads of production potential, its Kraken asset being one of the hottest properties off the coast of Britain. Still, the murky state of the broader oil market means that Enquest may fail to generate the sort of revenues many are hoping for.

When you also throw up the obvious operational uncertainties associated with extracting oil, I reckon Enquest is a risk too far right now. And a forward P/E ratio of 15.9 times (created by an anticipated 78% earnings drop) fails to fairly reflect the possibility of earnings downgrades further down the line, in my opinion.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The group’s underlying sales fell by 1.4% to £790.5m last year, pushing adjusted pre-tax profit down by 11.8% to £74.2m. Adjusted earnings per share for the year ending 1 April 2017 fell by 12.2% to 7.2p. The group said the fall was the result of the rising price of commodities such as sugar and cocoa, along with the weaker pound.

Premier’s biggest problem is debt. The firm only managed to reduce its net debt by £11m to £523.2m last year. This means that it s still 3.9 times earnings before interest, tax, depreciation and amortisation (EBITDA). That’s uncomfortably high.

Most companies target a net debt-to-EBITDA ratio of no more than two times. Premier Foods hopes to bring its ratio below three times “in the next three to four years”. To help this process, a £20m cost-cutting programme is planned for the next two years.

Many shareholders will think that the firm’s board should have accepted last April’s possible offer of 65p per share from US group McCormick & Company. At 42p, the firm’s shares are worth 35% less than McCormick’s bid. It’s not obvious to me why the board thought the offer was too low.

Premier stock has a forecast P/E of six for 2017/18. That may seem tempting, but I believe the group’s debt burden means that the share price is likely to remain under pressure for the foreseeable future. I’d look elsewhere.

Does this sky-high price make sense?

AIM-listed luxury handbag designer Mulberry Group (LSE: MUL) doesn’t have debt worries — the group had net cash of £11.3m at the end of September. But this financial security comes at a steep price for shareholders.

Mulberry’s annual profits peaked at £25.3m in 2012. Performance since then has been disappointing. The group reported a loss of £1.4m in 2015 and is expected to report a full-year profit for the year which ended on 31 March.

My concern is that a far greater recovery already appears to have been factored-into Mulberry’s share price. At 1,086p, the stock trades on a forecast P/E of 130 for the year just ended, falling to a P/E of 100 for the current year.

In my view, the only way this valuation might make sense is if Mulberry starts to deliver strong sales growth and rising margins. It’s not clear to me if this is likely.

Although Mulberry does have a new creative director — ex-Louis Vuitton designer Johnny Coca — the group’s sales have yet to break through the high of £168.5m seen in 2012. Profit margins also have a long way to go to reach previous highs. The company reported an operating margin of 3.9% last year, down from 21% in 2012.

This stock already seems to be priced for perfection. Although Mulberry’s future performance might justify this valuation, I’m afraid that any slight disappointment could cause the shares to crash. On that basis, I’m not interested at current levels.

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Premier Foods announced that, although sales ticked 4.5% higher during December, aggregate revenues for the third quarter slipped 1% from a year earlier, to £251.4m. And the business said that it expects conditions to “remain challenging during the fourth quarter,” adding that “sales will be below previous expectations.”

But sluggish sales are not Premier Foods’ only problem, and the Mr Kipling owner commented that “recovery of significant input cost inflation in certain areas is taking longer than originally foreseen” as the cost of items such as sugar, chocolate, dairy products and wheat have increased.

As a result Premier Food expects trading profits to be around 10% lower than previously expected in the 12 months to March 2017.

Supermarket in the soup?

By comparison, supermarket slugger Tesco (LSE: TSCO) has, for the large part, performed pretty solidly in recent months, continuing the steady sales recovery that kicked in early in 2016.

The Cheshunt business saw like-for-like sales in its core UK marketplace rise 1.8% during the 13 weeks to November 26, it announced last week. However, Tesco announced that the checkouts had begun to slow during the key Christmas period, with underlying sales rising by a less-impressive 0.7% in the six weeks to January 7.

Of course it is too early to proclaim that the festive figures are the start of another revenues reversal at Tesco. But given that the British supermarket space continues to fragment, with value chains Aldi and Lidl and premium outlets like M&S and Waitrose all expanding their bricks-and-mortar presence, I believe Tesco still faces a colossal challenge to keep the top line growing.

And with the business also facing the same cost pressures as Premier Foods, I reckon hopes of a solid profits recovery at Tesco could also fall flat.

Tasty titan

I have no such worries over the earnings outlook of comfort food favourite Just Eat (LSE: JE), however, and expect its expanding global imprint to deliver stunning returns.

The takeaway colossus saw its share price slip to two-and-a-half-month troughs last week after advising that sales have continued to cool. Like-for-like revenues rose 36% during 2016, the firm advised, lower than the rises of 50% and 46% punched in 2014 and 2015.

But Just Eat’s chunky sales figures are clearly not to be scoffed at. And the company continues to invest heavily across the globe to keep sales on an upward slant. Just last month the firm made acquisitions in Canada and the UK, and in the case of the latter the acquisition of hungryhouse for a possible £240m could prove a particular game changer.

And with sterling set to keep sliding in the months ahead, Just Eat is also on course to enjoy currency tailwinds in 2017 and potentially beyond.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Just Eat. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Undervalued? 

At the time of writing, shares in Unilever trade at a forward P/E of 19.4 while Premier Foods trades at only 5.6 times forward earnings. These metrics say a lot about the fortunes of these two companies. 

On one hand, you have an emerging markets star, owner of some of the most valuable consumer brands in the world, with sales growing at a steady 4% or more per annum. On the other hand, you have Premier Foods, a company that has struggled to get sales off the ground in recent years, is grappling with a mountain of debt and has only reported a profit once in the past five years. 

Premier’s problems stem from the company’s pre-crisis debt-funded acquisition binge. At its peak, Premier’s debt stood at £1.8bn, six times earnings before interest, tax, depreciation and amortisation — a ratio of more than two times EBITDA is usually considered high. 

Over the past few years, Premier has been trying to reduce debt but nearly £200m of derivative costs, pension problems, and flagging sales have hampered turnaround efforts. Sales have contracted around 19% per annum since 2011, compared to Unilever’s average revenue growth rate of 3.8% per annum since 2012. Unilever’s net debt-to-EBITDA is less than one today while Premier’s is still an elevated 3.5 times EBITDA. 

Haunting debt 

With such a hefty pile of debt still haunting the company, it’s clear that Premier will struggle to grow for some time to come. 

At the end of the first half, the company’s net debt stood at £556m, £29m lower year-on-year. At this rate, it will take more than a decade for Premier to get its debt back under control and that’s without accounting for pension issues. The company’s pension deficit amounted to £229m at the end of the first half. 

Still, for the company’s fiscal first half, sales rose by 2% reflecting the consolidation of acquisition Knighton Foods. 

Foolish summary 

Overall, City analysts are expecting revenue growth of around 5% for the year ending 31 March 2017 and a pre-tax profit of £68m has been pencilled-in, the company’s first pre-tax profit for two years (and the second in six). A pre-tax profit of £72m is expected for the year after and if the company meets this lofty target, then there’s hope for the group. 

Nonetheless, considering the company’s past troubles, debt and pension issues, I’m not convinced that Premier is even a speculative bet. The shares may be trading at a highly attractive valuation but it looks as if they’re cheap for a reason and that debt pile means there’s no hope of a dividend for many years. 

All in all, Premier isn’t the next Unilever. Unilever is still the best investment for long-term defensive investors. 

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.