Danone's journey through the desert came to an end somewhere in the year 2022. For what happened just before, here's a period summary. Since then, Nestlé has taken up the torch of loss, as the following graph shows.

The long-standing rival started to stall in the spring of 2023 and is having a hard time recovering.

But that's not the point.

Danone, after its good performance over the last three years and the misfortune of its comparables, has returned to valuation levels relatively close to those of Nestlé, Mondelez or The Hershey. A sort of readjustment that welcomed the rationalization of the business and the return of a certain stability in projections.

The next phase

The next phase, which consists of providing the market with reasons to hope for further progress, could be more difficult to "sell" to investors. Danone has maneuvered very well to derive strong growth from several specific activities, in particular Specialized Nutrition, which accounts for less than a third of annual sales but more than half of profits. But the momentum of its best activities is slowing down, which is a cause for concern.

Nevertheless, it has to be said that management adopted a very confident tone last October on the occasion of the publication of Q3 results, explaining in particular that performance is now less dependent on price increases than on the rest, which had been a major gas pedal post-Covid. Spending on promoting the nutritional benefits of products, which in the past seemed like a bottomless pit, now seems to be paying off, by strengthening several of the Group's iconic brands. In any case, this is once again an important area of investment for Danone, which at last seems to be getting its money's worth.

Fiscal Period: December 2020 2021 2022 2023 2024 2025 2026 2027
Net sales 1 23,620 24,281 27,661 27,619 27,376 27,418 28,243 29,350
Change - 2.8% 13.92% -0.15% -0.88% 0.15% 3.01% 3.92%
EBITDA 1 4,769 4,602 5,240 5,092 4,726 4,782 5,031 5,307
Change - -3.5% 13.86% -2.82% -7.19% 1.18% 5.21% 5.48%
EBIT 1 3,317 3,337 3,377 3,481 3,558 3,703 3,917 4,163
Change - 0.6% 1.2% 3.08% 2.21% 4.08% 5.76% 6.29%
Interest Paid 1 -310 -267 -291 -307 -305 -338.9 -320 -308.2
Earnings before Tax (EBT) 1 2,488 1,995 1,832 1,686 2,999 3,199 3,520 3,798
Change - -19.82% -8.17% -7.97% 77.88% 6.66% 10.05% 7.88%
Net income 1 1,956 1,924 959 881 2,021 2,239 2,472 2,654
Change - -1.64% -50.16% -8.13% 129.4% 10.81% 10.39% 7.37%
Announcement Date 19/02/21 23/02/22 22/02/23 22/02/24 26/02/25 - - -
1EUR in Million
Estimates

With the company's valuation back in line with the sector's peers, we need to rely either on the collective (expansion of sector multiples), or on superior individual performance (Danone's better-than-average growth/margin rate) to take it to the next level. In the meantime, the stock is at its price: this is illustrated by its stagnation over the last four months (the share is roughly on its levels of early September 2024). The good news is that management seems to have retained a safety cushion for 2024 performance, taking care to avoid raising its forecasts despite the lead accumulated after nine months of activity. We'll have to wait until February 26 for the verdict.