Nestle: Don't Blindly Assume A Recovery

YR Research
4.21K Followers
(7min)

Summary

  • Nestle is in the early stages of a turnaround with a new CEO, but investor scepticism remains high due to inherent challenges.
  • The company faces no growth, no margin improvements, rising debt, and a declining stock, with Q3 results showing minimal organic growth and revenue decline.
  • The new CEO has cut near-term guidance and plans to focus on iconic brands, fewer new products, digitalization, and efficiencies, but execution is a big question.
  • At 18.5 times forward earnings, Nestle isn't undervalued compared to peers, and market-beating performance is unlikely; I maintain a 'Hold' rating.

Kit Kat mini candy bars

Ekaterina79/iStock Editorial via Getty Images

Nestle (OTCPK:NSRGY) (OTCPK:NSRGF) is in the early stages of a turnaround attempt, which began with the CEO transformation announced in August.

So far, we're seeing reasonable scepticism from investors, with the stock slightly down over the

This article was written by

4.21K Followers
I aim to invest in companies with perfect qualitative attributes, buy them at an attractive price based on fundamentals, and hold them forever. I hope to publish articles covering such companies approximately 3 times per week, with extensive quarterly follow-ups and constant updates.I manage a concentrated portfolio targeted at avoiding losers and maximizing exposure to big winners. This means that often I'll rate great companies at a 'Hold' because their growth opportunity is below my threshold, or their downside risk is too high.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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