Nestlé SA (NESN) AI Stock Analysis

• Market Cap: CHF209.77B
• Dividend Yield: 3.92%
• Average Volume (3M): 2.99M
• Price to Earnings (P/E): 23.6
• Beta (1Y): 0.79
• Revenue Growth: -1.32%
• EPS Growth: -6.27%
• Country: CH
• Employees: 251,786
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Packaged Foods
• EPS (TTM): 2.15
• Shares Outstanding: 2,576,520,000
• 10 Day Avg. Volume: 3,003,339
• 30 Day Avg. Volume: 2,989,774
• PEG Ratio: -1.38
• Price to Book (P/B): 6.17
• Price to Sales (P/S): 2.26
• P/FCF Ratio: 17.81
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: CHF82.45
• Price Target Upside: -0.54% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 12
• EPS Forecast (FY): 4.39
• Revenue Forecast (FY): CHF88.82B

• Rating: 68 Neutral
• Price Target: CHF89.00 ▲(7.36% Upside)
• Action: Downgraded Date: 02/20/26
• Date: Action: Downgraded 02/20/26

The score is driven primarily by solid underlying financial quality (strong margins and consistent free cash flow) tempered by higher leverage and muted growth. Technicals are supportive with positive momentum, while valuation is only moderate for a mature growth profile. The latest call adds caution due to expected second-half margin pressure and continued China/FX-related headwinds.

Positive Factors

High, resilient margins

Nestlé's sustained mid-to-high 40s gross margin and ~16% operating margin reflect durable pricing power, scale and a favorable product mix across global categories. These structural margins support reinvestment, consistent profits and the ability to absorb commodity cycles, underpinning long-term cash generation.

Durable free cash flow generation

Consistent, sizable free cash flow over multiple years provides durable financial flexibility to fund growth platforms, dividends, share buybacks and debt reduction. Even with moderate cash conversion, the pattern of positive and improving FCF is a structural strength for long-term capital allocation and resilience.

Strong global brands & portfolio focus

Leading brands in Coffee and Petcare, plus the integration of Nutrition and Nestlé Health Science, create concentrated, higher-growth business units. Focused portfolio management and scaling of growth platforms (targeting 30% of sales) should enhance organic growth durability and long-term category leadership.

Negative Factors

Rising leverage

A meaningful step-up in leverage reduces balance-sheet flexibility and increases exposure to higher interest costs or refinancing risk over time. Elevated debt limits strategic optionality for M&A or buybacks and makes the company more sensitive to margin or cash-flow shocks, requiring sustained deleveraging to restore flexibility.

Soft top-line trends

Persistent muted revenue growth across recent years constrains operating leverage and long-term upside. For a large packaged-food business, stalling organic growth forces reliance on pricing, cost programs or portfolio moves; each has limits, so sustained weaker sales could structurally cap margin expansion and returns.

Greater China and FCF headwinds

Demand weakness in China and working-capital/FX-driven FCF volatility are structural risks for medium-term performance. China exposure can depress real internal growth and margin recovery, while recurring working-capital and currency pressures can reduce free cash flow available for debt reduction and reinvestment, slowing strategic progress.

Nestlé SA Business Overview & Revenue Model

Company Description

Nestlé S.A., together with its subsidiaries, operates as a food and beverage company. The company operates through Zone Europe, Middle East and North Africa; Zone Americas; and Zone Asia, Oceania and sub-Saharan Africa segments. It offers baby foods under the Cerelac, Gerber, Nido, and NaturNes brands; bottled water under the Nestlé Pure Life, Perrier, and S.Pellegrino brands; cereals under the Fitness, Nesquik, cheerios, and Lion Cereals brands; and chocolate and confectionery products under the KitKat, Nestle L'atelier, Nestle Toll House, Milkybar, Smarties, Quality Street, Aero, Garoto, Orion, and Cailler brands. The company also provides coffee products under the Nescafé, Nespresso, Nescafé Dolce Gusto, Starbucks Coffee At Home, and Blue Bottle Coffee brands; culinary, chilled, and frozen foods under the Maggi, Hot Pockets, Stouffer's, Thomy, Jacks, TombStone, Herta, Buitoni, DiGiorno, and Lean Cuisine brands; dairy products under the Carnation, Nido, Coffee-Mate, and La Laitière brands; and drinks under the Nesquik, Nestea, Nescafé, and Milo brands. In addition, it offers food service products under the Milo, Nescafé, Maggi, Chef, Nestea, Stouffer's, Chef-Mate, Sjora, Minor's, and Lean Cuisine brand names; healthcare nutrition products under the Boost, Peptamen, Resource, Optifast, and Nutren Junior brands; ice cream products under the Dreyer's, Mövenpick, Häagen-Dazs, Nestlé Ice Cream, and Extrême brands; and pet care products under the Purina, ONE, Alpo, Felix, Pro Plan, Cat Chow, Fancy Feast, Bakers, Friskies, Dog Chow, Beneful, and Gourmet brands. The company was founded in 1866 and is headquartered in Vevey, Switzerland.

How the Company Makes Money

Nestlé generates revenue through a multi-faceted business model that involves the production and sale of a vast range of food and beverage products. Key revenue streams include sales from its various product categories such as powdered and liquid beverages, dairy products, and pet care items. The company leverages its extensive distribution network to reach consumers globally, and it also engages in strategic partnerships with retailers and suppliers to enhance its market presence. Additionally, Nestlé invests in innovation and product development to meet changing consumer demands, which contributes to sustained revenue growth. The company benefits from economies of scale due to its size and global reach, allowing it to optimize production and reduce costs, further enhancing profitability.

Nestlé SA Financial Statement Overview

Summary

Strong, resilient profitability and durable free cash flow support the fundamentals, but the score is held back by soft recent revenue trends and a meaningful step-up in leverage (higher debt-to-equity), which reduces balance-sheet flexibility.

Income Statement

Nestlé shows strong and resilient profitability for a packaged foods business, with gross margin holding in the mid-to-high 40s and operating profitability remaining healthy (2025 operating margin ~15.9%; EBITDA margin ~20.0%). However, the top line has been soft for several years (revenue down ~1–2% in 2023–2025 after growth in 2022), and net margin has compressed versus the 2021 peak (2025 net margin ~10.1% vs. ~19.3% in 2021). Overall: high-quality margins, but a weaker recent growth and earnings trajectory.

Balance Sheet

Leverage has trended higher, with debt-to-equity moving from ~0.88 (2020–2021) to ~1.76 (2024–2025), which reduces balance sheet flexibility. Equity has also declined from 2021 levels, while total debt remains elevated. Offsetting this, returns on equity are strong (roughly ~27–31% in 2023–2025), suggesting the company is still generating attractive profitability on the capital base. Net: strong returns, but meaningfully higher leverage is the key watch item.

Cash Flow

Cash generation is solid and improving recently, with free cash flow rising strongly in 2023 and 2025 (2025 free cash flow up ~21.8%). Free cash flow is consistently positive and sizable (about 6.5B–11.4B from 2022–2025). That said, cash conversion to earnings is moderate rather than exceptional (free cash flow running at ~55–72% of net income across the period), indicating some working-capital/cash-timing or reinvestment demands. Overall: healthy, durable cash flow with decent (not perfect) earnings-to-cash conversion.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	89.49B	91.72B	93.35B	94.78B	87.47B
Gross Profit	40.80B	43.05B	43.02B	43.03B	42.00B
EBITDA	17.90B	18.18B	18.16B	18.24B	17.14B
Net Income	9.03B	10.88B	11.21B	9.27B	16.91B
Balance Sheet
Total Assets	127.15B	139.26B	126.55B	135.18B	139.14B
Cash, Cash Equivalents and Short-Term Investments	6.23B	7.87B	5.85B	6.69B	14.04B
Total Debt	57.85B	63.56B	55.24B	54.31B	46.89B
Total Liabilities	94.09B	102.57B	90.16B	92.39B	85.42B
Stockholders Equity	32.81B	35.92B	35.74B	41.98B	53.14B
Cash Flow
Free Cash Flow	11.38B	10.71B	9.74B	6.55B	8.52B
Operating Cash Flow	15.90B	16.68B	15.94B	11.91B	13.86B
Investing Cash Flow	-5.56B	-8.62B	-6.20B	-2.51B	-3.65B
Financing Cash Flow	-10.88B	-7.36B	-9.76B	-10.78B	-8.55B

Nestlé SA Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 82.90
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:NESN, the sentiment is Positive. The current price of 82.9 is above the 20-day moving average (MA) of 78.78, above the 50-day MA of 77.16, and above the 200-day MA of 78.05, indicating a bullish trend. The MACD of 1.64 indicates Negative momentum. The RSI at 69.41 is Neutral, neither overbought nor oversold. The STOCH value of 84.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:NESN.

Nestlé SA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EMMN	71 Outperform	$4.36B	20.46	18.34%	2.26%	10.78%	10.53%
ARYN	69 Neutral	CHF1.37B	13.86	24.18%	―	0.90%	30.62%
NESN	68 Neutral	CHF209.77B	23.62	32.66%	3.92%	-1.32%	-6.27%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
BELL	53 Neutral	CHF1.36B	19.49	7.93%	3.18%	4.59%	-3.22%