WEBULL
WebtradeDownload

Pernod Ricard (ENXTPA:RI) Could Be 27% Undervalued After Weaker Full Year Earnings

Simply Wall St · 1d ago

Dividend proposal and weaker earnings put Pernod Ricard in focus

Pernod Ricard (ENXTPA:RI) is back in the spotlight after reporting full year 2026 results that showed lower sales and net income compared with the prior year, alongside a proposed stable €4.70 per share dividend.

The company reported full year sales of €9.404b, compared with €10.959b a year earlier, with net income at €1.203b compared with €1.626b. The update also included a proposed final dividend of €2.35 per share, available in cash or shares, subject to shareholder approval.

The latest earnings and dividend proposal come after a choppy period for Pernod Ricard’s stock, with the share price at €63.14 and a 30 day share price return down 8.12% while the 90 day share price return is up 3.31%.

Over a longer horizon, the pressure is more evident, with the year to date share price return down 13.48% and the 1 year total shareholder return down 32.03%, which suggests recent momentum has been fading rather than building.

Compare Pernod Ricard's recent setback with other companies that currently screen as 265 high quality undervalued stocks to see how the market is pricing different earnings and dividend stories.

After weaker earnings, a falling share price and a steady €4.70 dividend proposal, Pernod Ricard now asks a simple question of investors: Does the current valuation still tip the risk reward balance in favour of buyers?

Most Popular Narrative: 27% Undervalued

The most widely followed narrative for Pernod Ricard compares a fair value estimate of €86.53 with the last close at €63.14. This implies a sizeable valuation gap powered by specific growth and margin assumptions rather than sentiment alone.

A new phase of operational efficiency, with a targeted €1 billion in further cost savings by 2029 and an already completed €900 million program, is expected to support ongoing organic margin expansion and improved free cash flow conversion (targeting ~80%), enhancing earnings resilience despite short-term headwinds.

Read the complete narrative. Read the complete narrative.

Want to understand why this valuation leans on efficiency rather than rapid revenue growth? The key assumptions blend steady sales, higher margins and a future profit multiple that differs from today. Curious which of those levers carries the most weight in the €86.53 fair value story? The full narrative lays out the numbers that sit behind that gap.

Result: Fair Value of €86.53 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slower revenue assumptions and pressure on profit margins mean that any setback in key markets, or tougher regulation, could quickly challenge the Pernod Ricard efficiency narrative.

Find out about the key risks to this Pernod Ricard narrative.

Next Steps

If this mix of pressure and potential around Pernod Ricard feels finely balanced, take a closer look at the numbers and weigh both sides for yourself. To see the full breakdown of the risks that concern investors and the rewards that keep interest alive, review the 3 key rewards and 2 important warning signs

Looking for more investment ideas beyond Pernod Ricard?

If Pernod Ricard has sharpened your focus on valuation, do not stop here. Put the broader market to work and let structured stock ideas come to you.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.