Intro
Tonnellerie Francois Freres SA (TFF Group) is a leading manufacturer of oak barrels and casks, catering to the wine and spirits industry. With a deep-rooted heritage in cooperage, the company has successfully expanded into whisky and bourbon aging, diversifying its revenue streams beyond traditional wine barrels.
Since its foundation, TFF has remained under the stewardship of the Francois family, now in its fourth generation, which currently holds a 71% ownership stake. The remaining shares have been publicly traded on the Paris stock exchange since 1999.
Valuation
Due to cost pressures and slowing demand, the stock has declined nearly 50%, now trading at a price-to-book (P/B) ratio of approximately 1.08 – just slightly above book value.
Additionally, the company has accumulated a sizable debt position following significant investments in bourbon production capacity to capture anticipated growth. With the majority of these investments now complete, the next phase will likely focus on reducing indebtedness.
Financial years 2023 and 2024 were strong, with earnings per share (EPS) of €2.44 and €2.60, respectively. While financial year 2025 is expected to be more challenging, the company’s long-term fundamentals seem to remain solid.
What’s next?
Looking ahead, TFF's expansion into American whiskey and bourbon cask production is poised to be a key growth driver. While short-term uncertainty persists, the company’s core strength in high-quality barrel production remains intact, positioning it as a compelling long-term opportunity. If TFF can regain solid growth momentum and reduce capital expenditures, significant free cash flow generation could follow.
Current price
€24.70 per share
Disclosure
The author is currently long TFF.
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