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Viñedos Emiliana Stock – Investment Analysis

Common Stock: Viñedos Emiliana

Current Market Price: $30 CLP; $0.04 USD

Market Capitalization: $19 billion CLP; $23.5 million USD

*All values in this article are expressed in Chilean Pesos (CLP)  unless otherwise noted.

**The bulk of this analysis is based on the company’s most recent audited financial report, which can be found by following this link.

Viñedos Emiliana - Stock Chart
Viñedos Emiliana – Stock Chart

Viñedos Emiliana Stock – Summary of the Company

Viñedos Emiliana is a Chilean wine producer, distributor, and exporter. They have a total of 762 hectares under vine and a production capacity of 24 million liters of wine per year. The company’s largest export market is Europe, followed by The U.S. and Asia.

Viñedos Emiliana - Export Markets
Viñedos Emiliana – Export Markets

Viñedos Emiliana was founded in 1986 and is headquartered in Santiago, Chile.

Revenue and Cost Analysis

In 2020 Viñedos Emiliana sold 732,744 cases (1 case represents 12, 750ml bottles), a significant decrease compared to 776,917 cases in 2019. Their average price per case was $37 USD.

Total revenue in 2020 was $25.4 billion, an increase from $22.2 billion in 2019. Their COGS was $16 billion in 2020, representing a gross margin of 37%, an improvement compared to 35% the previous year.

Viñedos Emiliana has been consistently profitable. In 2020 the company had net income of $1.9 billion, representing a profit margin of 7%, a significant increase from 4% in 2019.

Balance Sheet Analysis

Viñedos Emiliana has a sound balance sheet. They have a strong base of long term assets and sufficient near term liquidity. Liability levels are reasonable and the company is not leveraged.

Debt Analysis

As of year-end 2020 the company has $12.5 Billion in total debt outstanding, $6.5 billion of which is classified as current.

Viñedos Emiliana - Debt Table
Viñedos Emiliana – Debt Table

Viñedos Emiliana Stock – Share Dynamics and Capital Structure

As of year-end 2020 the company has 636.4 million common shares outstanding and 473 shareholders of record. The company’s 12 largest shareholders own a combined 74.3% of the company.

Dividends

The company paid total dividends of $0.40 cents per share in 2020. At the current market price this implies a dividend yield of 1.3%.

Viñedos Emiliana Stock – 3 Metrics to Consider

Debt to Equity Ratio

Total Liabilities/Total Share Holder Equity

$22.7 billion / $31.7 billion = .72

A debt to equity ratio of .72 indicates that Viñedos Emiliana uses a mix of debt and equity in its capital structure, but is not leveraged, and relies more heavily on equity financing.

Working Capital Ratio

Current Assets/Current Liabilities

$24.4 billion / $12.5 billion = 1.9

A working capital ratio of 1.9 indicates that Viñedos Emiliana has a sound liquidity position and should not have problems meeting its near term obligations.

Price to Book Ratio

Current Share Price/Book Value per Share.

$30 / $50 = .6

Viñedos Emiliana has a book value per share of $50. At the current market price this implies a price to book ratio of .6, meaning the company’s stock currently trades at a significant discount to the book value of the company.

Viñedos Emiliana Stock – Summary and Conclusions

Viñedos Emiliana is a well-run company that should provide a conservative long term investment vehicle for investors seeking exposure to the global wine industry. The company is sound financially with low debt, a profit, and management returns capital to shareholders via a dividend.

The company’s diversified export destinations lowers risk for investors, while expanding wine markets in Asia provide long term growth opportunities.

I like Viñedos Emiliana business and think it should prove to be an effective investment vehicle long term. Investors can also consider other Chilean wine stocks such as Vina Santa Rita.

Disclaimer

This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.

This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.

Patrick Flood, CFA

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