BN FP

DANONE SA

Consumer


Presented:04/24/2017
Price:€63.65
Cap:$43.74B
Current Price:€65.60
Cap:$47.03B

Presented

Date04/24/2017
Price€63.65
Market Cap$43.74B
Ent Value$49.45B
P/E Ratio22.81x
Book Value€21.25
Div Yield0.03%
Shares O/S611.40M
Ave Daily Vol1,736,621
Short IntN/A

Current

Price€65.60
Market Cap$47.03B
Danone SA engages in the food processing industry. The company operates through the following divisions: Fresh Dairy Products, Waters, Early life Nutrition, and Medical Nutrition. The Fresh Dairy Products division produces and markets yogurts, fermented fresh dairy products, and other specialized fresh dairy products. The Waters division comprises the natural waters business along with aqua drinks. The Early Life Nutrition division focuses on specialized foods for babies and young children to complement breast-feeding while always complying with the World Health Organization Code and local laws. The Medical Nutrition division focuses mainly on people receiving medical treatment, babies afflicted with certain illnesses and frail elderly people. The division's products are designed primarily to treat disease-related malnutrition by satisfying special food needs. Danone was founded on February 2, 1899 and is headquartered in Paris, France.

Publicly traded companies mentioned herein: Danone SA (BN FP), Kraft Heinz Co (KHC)

Highlights

The presenter is long Danone stock and views it as undervalued in the low-€60s, which is just 14x his 2019 EPS estimate (versus 15x the Consensus 2019 estimate). Despite a good organic growth profile, Danone trades at a three-turn discount to other European Staples. This is likely because the French food/ nutrition company has historically frustrated shareholders in various ways; however, relatively new CEO Emmanuel Faber (10/2014-Present) appears to be more cost conscious, and the most recent acquisition of WhiteWave - a $10.4 billion deal that closed 4/12/17 - looks like a good deal. If management can be more disciplined on cost and successfully integrate WhiteWave, there is the potential for the multiple to re rate and the stock to trade up to the low-€80s for a 30%+ total return (including the dividend yield).

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Idea Discussion

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