COMPANY DESCRIPTION
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 principal products are as follows: coffee; water; other beverages; dairy products; breakfast cereals; infant foods; performance nutrition; clinical nutrition; culinary products; frozen foods; ice cream; chocolate and confectionery; food services and professional products; pet care; flavors for the food industry; and pharmaceutical products. Nestle is one of the largest consumer goods companies in the world, operating in the food andbeverages sector.The company's portfolio of strong brands across various product categories helpsit in maintaining a leading market position.
ECONOMIC MOAT
Nestle’s moat is evidenced by NSRGY’s expansive global distribution platform, diverse product portfolio that spans the grocery store, and renewed emphasis on driving cost savings. NSRGY has 20 brands that each generate in excess of CHF 1 billion in annual sales. NSRGY possesses a high degree of pricing power, as volume has generally held up despite the fact that the firm has raised prices across its product portfolio over many years.
OUTLOOK
Nestle continues to battle a difficult operating environment. The company aims to benefit from a shift in consumer purchasing habits. Although customers still exhibit strong demand for snack food items, the ingredients they desire have changed. Thus, Nestle has focused on revamping its offerings, striving to produce foods that are more-natural, organic, gluten-free, and contain greater amounts of protein. These strategic actions ought to bolster revenues and earnings down the road. Nestle eyes its Health Science and Medical Nutrition units for future growth. NSRGY has been working to develop meal replacement products, nutritious on-the-go food choices, and a variety of sports/medical supplements. In fact, changing healthcare legislation may eventually lead to these offerings being covered under traditional insurance plans, which could deliver a sizable boost to the top and bottom lines. NSRGY should appeal to portfolios searching for income, with a good deal of safety.
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STRENGTHS
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Strong brands across diversified product portfolio consolidate Nestle's global leadership
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Strong R&D capabilities help in meeting specific consumer needs
WEAKNESSES
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Product recalls due to the presence of horsemeat
THREATS
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Increasing private label penetration could eat into the company's market share infuture
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Stringent regulations to increase compliance costs
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Water scarcity in future could impact production costs and capacity
OPPORTUNITIES
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Transition to a 'nutrition and well-being'company
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Pioneering presence in the growing single-serve coffee market
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Focus on enhancing business opportunities in D&E economies
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.
The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.
