Narrow-moat Sodexo posted a strong first-half update with organic revenue growth of 8.5%, rising into the second quarter. Operating margins also increased by 40 basis points year over year to 5.1%. Management tightened full-year guidance with organic revenue growth now expected to be at the top end of the previously guided 6%-8%. We reiterate our EUR 92 fair value estimate and see decent upside from the prevailing share price.
Sodexo estimates that the entire market for outsourced food services is only about 50% penetrated, which leaves ample room for the company to increase market share.
Cuts to investment in the commodity sector could pressure Sodexo’s remote site business.
|
Metric
|
SW
|
CPG
|
|---|---|---|
Price/Earnings (Normalized) | 17.00 | 24.64 |
Price/Book Value | 2.72 | 7.45 |
Price/Sales | 0.53 | 1.26 |
Price/Cash Flow | 12.32 | 17.92 |
|
Metric
|
SW
|
CPG
|
|---|---|---|
Quick Ratio | 1.11 | 0.65 |
Current Ratio | 1.22 | 0.75 |
Interest Coverage | 5.65 | 9.83 |
|
Metric
|
SW
|
CPG
|
|---|---|---|
Return on Assets (Normalized) | 5.08% | 8.39% |
Return on Equity (Normalized) | 22.19% | 27.41% |
Return on Invested Capital (Normalized) | 9.76% | 15.99% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
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