NOMD's Pullback Looks Like a Prime Pre-Earnings Entry Point

NOMD is due to release Q2 earnings on August 4

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Nomad Foods Ltd (NYSE: NOMD) is one of the largest frozen foods companies in Europe. The United Kingdom-based company has a global portfolio of food companies and brands within the frozen category and across the broader food sector. Their portfolio of brands includes Birds Eye, Findus, iglo, Aunt Bessie's and Goodfella's.

NOMD has been on the decline since its record high of $31.85 back in early June, guided lower by its 20-day moving average. The security's 200-day moving average is keeping some of today's negative price action in check, though, and the trendline helped contain a sharp pullback in February. Year-to-date, the equity is up 5.9%, though its lost roughly 15% since its aforementioned peak. 

nomd chart july 19

Nomad Foods is expected to report its second-quarter earnings before the open on Wednesday, Aug 4. NOMD has shone in the earnings confessional during the past year, outperforming earnings estimates on all four of its most recently released reports. For the second quarter of 2020, Nomad Foods beat analysts’ estimates by a margin of $0.05 and reported earnings per share (EPS) of $0.40. For the third quarter of 2020, the food company's EPS dropped to $0.37, but still beat expectations by a margin of $0.03. For the fourth quarter of 2020, Nomad Foods posted an increase in earnings, rising to $0.46 per share and outperformed estimates by a margin of $0.01. For Q1 of 2021, Nomad Foods reported an EPS of $0.56 and beat expectations by a margin of $0.10. Analysts currently expect NOMD will be reporting a decreased EPS of $0.38 for its upcoming earnings report in early August.

Nomad Foods stock has a trailing price-earnings ratio of 19.47 and a forward price-earnings ratio of 14.90, which suggests the company is fairly valued when considering overall revenue and net income growth. Since fiscal 2017, Nomad Foods has grown revenues by roughly 30% and increased net income by 67%. However, on a slightly less positive note, Nomad Foods has approximately $1.85 billion in total debt compared to only $479.2 million in cash on the balance sheet. Nonetheless, NOMD has strong growth potential as well as a decent valuation, making Nomad Foods stock a solid short-term and long-term investment.

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