The worst performer on the ASX 200 on Monday has been the Inghams Group Ltd (ASX: ING) share price.
In early afternoon trade the poultry producer's shares are down almost 9% to $4.15.
Why are Inghams Group's shares being fried today?
The good news is that the vast majority of today's decline has little to do with the company's performance and everything to do with its decision to return funds to shareholders.
Last week the company's shareholders voted in favour of a return of capital to shareholders of approximately $125 million. This works out to be the equivalent of 33 cents per share capital return.
And just like when shares trade ex-dividend for a company's dividend, they all trade ex-capital return.
This is what has happened this morning, which means that anyone buying its shares today would not be eligible for the 33 cents per share return. Because of this, its share price has fallen to reflect the value of its shares less the capital return.
Should you buy the dip?
While I have been impressed with Inghams this year, I think the strong share price rise over the last few months means that its shares are about fair value now.
In light of this, I would suggest investors look elsewhere within the food industry for options that might offer a more compelling risk/reward.
A couple of good options could be quick service restaurant operator Collins Foods Ltd (ASX: CKF) and horticulture company Costa Group Holdings Ltd (ASX: CGC).
I like Collins Foods due to its solid long term growth prospects from the expansion of its KFC network in Europe and the roll out of the Taco Bell brand in Australia.
Costa Group has similar positive long-term growth prospects as well thanks to its expansion plans and the growing demand for its produce.
