Jean-Philippe Bertschy, stock analyst at Vontobel Research, continues to advise in a recent stock analysis to buy the share of the food company Nestlé S.A. (ISIN: CH0038863350, WKN: A0Q4DC, ticker symbol: NESR, SIX Swiss Ex: NESN, Nasdaq OTC symbol: NSRGF).
Organic growth met expectations: 3.5% organic growth with a RIG of 2.9% and a price level of 0.6%. Except for the Waters division, which had a strong 4Q, all regions and departments had met analyst expectations with regard to RIG and prices.
Margin +60 bp: This corresponds to the analyst’s forecast. Here, too, there are hardly any differences compared to given analyst expectations; the exception is Waters, where there has been a slight decline offset by PetCare’s continued strong profitability. The underlying EPS forecast increased by 11.1% in constant W., a strong performance.
Only cash is true: The strong free cash flow rose by 10.9% to a record level of 11.9 billion or 12.9% of sales, an increase of 250 bp compared to the FY17. Main reasons: more effective investments and an inflow of working capital (VontE: outflow). The ROIC rose by 20 bp to 12.3%.
All projects on track: Sale of the US ice cream business on January 31 completed (analyst forecast: March 31); Exit from the US DSD business (pizza and ice cream) six months earlier than planned.
Outlook for 2020: Increase in organic sales growth (against consensus expectations of 3.9%), margin improvement (consensus: +60 bp), restructuring costs of CHF 500 million; it was too early to quantify the financial impact of the coronavirus.
Investors could now focus on slightly lower organic growth and the operating profit margin. Bertschy would rather highlight the underlying sustainable improvements over the past year. All projects are on track. Since 2017, over 50 transactions have been carried out, which corresponds to 12% of sales and a contribution of 35 bp to organic growth in FY19: This demonstrates highly efficient portfolio management. In addition, Nestlé anticipates a stable free cash flow as a percentage of sales of 12% and an ROIC that will increase towards 15%. The case is far from being discussed.
Jean-Philippe Bertschy, Vontobel Research stock analyst, confirms his « buy » rating for the Nestlé stock. The target price was CHF 116.00. (Analysis from February 13th, 2020)
Please also note information on the obligation to disclose in the event of a conflict of interest within the meaning of Directive 2014/57 / EU and corresponding EU regulations for the analyst house mentioned at the following link.
Stock exchanges Nestlé shares:
L&S share price Nestlé share:
97.82 EUR -2.38% (13.02.2020, 15:06)
SIX Swiss Exchange share price Nestlé share:
104.18 CHF -2.71% (13.02.2020, 14:51)
ISIN Nestlé share:
WKN Nestlé share:
Ticker symbol Nestlé share:
SIX Swiss Exchange ticker symbol Nestlé share:
Nasdaq OTC ticker symbol Nestlé share:
Brief profile of Nestlé S.A .:
Nestlé (ISIN: CH0038863350, WKN: A0Q4DC, ticker symbol: NESR, SIX Swiss Ex: NESN, Nasdaq OTC symbol: NSRGF) is the world’s largest food manufacturer and the recognized number one in nutrition, health and well-being. Nestlé products are available all over the world. In addition to frozen products, various beverages (coffee, tea, mineral water, etc.), dairy products and confectionery, pharmaceutical products, special foods and products for pets are also manufactured. The best-known brands of the group include Nescafé, Nesquik, Maggi, Thomy, KitKat, Buitoni, LC1, Smarties and many more.
With the takeover of the baby food division from Pfizer in 2012, the group is also active in this area. In addition, Nestlé is testing the health benefits of its products in the sports nutrition area of the company’s high-tech center in Lausanne. Here, Nestlé Health Science works on the development of special foods that should help with diabetes, cardiovascular problems or Alzheimer’s. The company has manufacturing facilities around the world. (02.13.2020 / ac / a / a)
Disclosure of possible conflicts of interest:
You can view possible conflicts of interest on the website of the creator / source of the analysis.