An interesting opportunity sometimes arises in the stock market when a company adopts plans to grant their employees the opportunity to acquire the status of shareholders if they exchange part of their salary for shares of the company. When part of their wealth is tied to the company's stock, employees usually are more likely to give their all to help grow the company, increasing the value for all stakeholders. This is the same logic that is behind stock compensation packages for company executives.
Investors may therefore be interested in Davide Campari-Milano N.V. (MIL:CPR, Financial), as this is one such company that is offering shares to employees. The Milan, Italy-based owner of the historic signature product, Campari Bitter, as well as a variety of other renowned spirits, wines and soft drinks, wants to give nearly 4,000 employees across 90 countries around the world the chance to become shareholders of the company.
According to the company's new employee shares ownership plan (ESOP), called "Camparista Shares," which is set to start in January 2022, employees can authorize the company to allocate a specific percentage, up to 5%, of their gross salary to the purchase of shares. The transaction will occur at the end of each quarter. Furthermore, at the end of a three-year period, employees will be granted one additional free share for every two shares that they have acquired and held.
The Camparista Shares project should help Campari continue to increase its value on the stock market. With a current market cap of 14.3 billion Euros ($16.54 billion), the stock has grown 15 times over since shares went public in 2001, outperforming the FTSE MIB, the benchmark index for the Borsa Italiana stock exchange, by more than 100% over the last five years.
The company is a prominent leader in the global market of spirits thanks to a strong portfolio of popular brands which have become true symbols amid branded spirits throughout the years. The company owns 22 production plants and markets its brands in the Americas, Europe and internationally.
The gradual reopening of economies around the world, coupled with rising home consumption, allowed the company to record double-digit growth across key markets. As a result, total revenue grew more than 30% year over year to €1 billion in the first six months of 2021. The adjusted Ebit jumped 90% to €223.2 million for an adjusted Ebit margin rate of 33.3% of total revenue, up 190 basis points year over year.
The adjusted net profit of the group was €156.8 million more than doubling from the same period of 2020. The free cash flow from ongoing operations has also increased by 118% to €141.6 million, while the net debt of €1.065 billion has gone down by 3.5% since Dec. 31, 2020.
The balance sheet looks good as the total debt-equity ratio is 79.54 and the current ratio is 2.08. Furthermore, the interest coverage ratio of 16.9 determines that Davide Campari-Milano can pay interest expenses on outstanding debt easily.
The stock is traded on the Borsa Italiana stock exchange, and its share price was €12.51 during regular hours trading on Thursday for a 52-week range of $9.85 to $14.67.
The stock is not cheap when compared to its 50-day moving average or 200-day moving average. Additionally, the trailing price-earnings ratio is 57.13, the price-sales ratio is 7 and the price-book ratio is 6.44.
The 14-day relative strength index of 68 tells that the stock is not overbought yet despite the strong share price increase.
The stock grants a forward dividend yield of 0.44% as of the writing of this article.
According to Statista, the global market of spirits will grow by no less than 7% annually over the next five years between 2021 and 2025, creating strong tailwinds for operators. Davide Campari-Milano N.V. is well-positioned to take advantage of industry growth, in my view, given its focus on increasing its share price and retaining employees.
