NESN-CHE - Embedded Expectations Analysis - 2018 09 14
Nestlé S.A. (NESN:CHE) currently trades near recent averages relative toUAFRS-based (Uniform) Earnings, with a 23.6x Uniform P/E. At these levels, the market is pricing in bullish expectations but management is concerned about cost headwinds, pricing activities, and recent investments
Specifically, management appears be concerned about packaging, distribution, and water cost headwinds. Additionally, they may be concerned about pricing decreases in Brazil and sub-Saharan Africa due to deflationary trends, and their ability to pass on inflationary costs to consumers in the U.S.. Moreover, they may lack confidence in their ability to increase value for shareholders and in their assertion that favorable commodity prices will help them meet raised operating profit margin expectations. Furthermore, they may lack confidence in their ability to capitalize on significant industry changes, particularly shifts in the food and beverage market environment. Also, they may lack confidence in their recent investments in Atrium and Blue Bottle Coffee, and in their ability to continue investing in their core food and beverage brands
Nestle is a holding company which is based in Switzerland. Through its subsidiaries and allied companies, Co. is engaged in the food processing industry. Co.'s product portfolio has seven categories, Powder and Liquid Beverages, Nutritional and Health Science, Milk products and ice cream, Prepared dishes and cooking aids, PetCare, Confectionery and Water.
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