Nestle: Now cheaper again

Last Updated: 8. März 2024By

In recent months, the Swiss stock of Nestlé has suffered significant losses. The prices have fallen from levels above 115 euros to less than 100 euros. Many readers are wondering, as am I: Will the stock become a buying opportunity again? Personally, I consider the value to be very attractive.

Nestlé: No special incidents! One of the major problems for the Swiss company is their water business. Recently, a US lawsuit was filed stating that the mineral water of the brand Perrier was filtered and not mineral water. Nestlé, on the other hand, argues that the water comes from the Perrier spring in France.

Such disputes, which I only mentioned as an example, are capable of putting such a company under pressure in the meantime – without a doubt. However, according to the opinion of numerous value investors and relevant studies, Nestlé’s valuation remains favorable.

Currently, the Swiss company is traded at a P/E ratio of about 20. The price-earnings ratio has also been valued at 20% higher in recent years – and therefore, solely from these ratios, a potential can be determined. The price-to-book ratio (P/B) is estimated by the stock market to be slightly above 3 – which is also significantly lower in historical comparison. These two factors alone show that the stock market is extending an invitation here – at least from a value perspective.

Analysts are optimistic It is not surprising that analysts are also satisfied and see a medium price target of around 108.50 Swiss francs. The current exchange rate for the Swiss franc is less than 94. This results in a potential of nearly 19%, which also fits into the simple calculation mentioned above.

In addition, analysts and investors can currently assume that the dividend will continue to increase in the coming years. My estimate for the current year is a dividend yield of approximately 3.4%. For the coming year, a dividend yield – based on the current price – of 3.6% is expected.

In short: The valuation does not bother me. The stock will certainly not become a trader’s object. However, apart from the lower entry price, nothing has changed in the solid and dividend-strong valuation. Many readers that I know, still hold the stock.

Nestlé – Optimism remains – WKN: A0Q4DC – ISIN: CH0038863350 Source: