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Danone SA ADR (DANOY)
OTHER OTC:DANOY
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Danone SA
(OTC:DANOY)
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Rating:63Neutral
Price Target:
$18.50
▲(1.65% Upside)
Action:ReiteratedDate:02/23/26
The score is driven primarily by steady but unspectacular financial performance (stable margins and recurring free cash flow but weak recent revenue momentum and moderate debt coverage). Earnings-call commentary is a meaningful positive due to solid FY25 execution and supportive FY26 guidance, partly offset by recall-related and regional (North America) risks. Technicals are only modestly supportive and valuation is a headwind given the elevated P/E.
Positive Factors
Free Cash Flow & ROIC
Consistent high free cash flow (EUR 2.8bn in 2025) and a double-digit ROIC (10.7%) indicate durable cash generation and improving capital efficiency. This funds capex, dividends, targeted M&A and deleveraging without relying on volatile external financing, supporting medium-term strategic flexibility.
Operating Profitability
Margin expansion to 13.4% with EPS growth shows structural operating leverage and pricing/mix resilience. Sustained margins reflect disciplined cost management and premium platforms, underpinning durable earnings power even if top-line growth moderates over the next 2-6 months.
Platform & Specialized Nutrition Scale
Strength in specialized nutrition and large-scale platforms (Oikos PRO, Alpro, medical nutrition ~€1bn each) reflects portfolio tilt toward higher-margin, resilient categories. Kate Farms M&A builds US medical nutrition scale, supporting sustainable growth, channel penetration and margin improvement over time.
Negative Factors
Infant Milk Formula Recalls
Product recalls in IMF create reputational and channel disruption risks that can persist beyond the immediate sales hit. Rebuilding trust with consumers and healthcare partners requires sustained investment in quality, communications and potential reformulation, pressuring volumes and marketing spend for multiple quarters.
North America Underperformance
Weak volumes and margin decline in North America—one of Danone's key developed markets—point to structural competitiveness and portfolio execution issues. If management cannot restore volume growth and margins, sustained underperformance could materially limit group growth and dilute overall margin progress.
Limited Top-Line Momentum & Moderate Leverage
A meaningful revenue decline alongside only modest cash coverage of debt signals constrained organic growth and moderate financial flexibility. With OCF covering ~25% of total debt, the company can service obligations but has limited headroom to accelerate large-scale investments or rapid deleveraging without reallocating cash or increasing leverage.
Danone SA (DANOY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$54.99B
Dividend Yield2.61%
Average Volume (3M)230.22K
Price to Earnings (P/E)26.6
Beta (1Y)-0.24
Revenue Growth1.11%
EPS Growth84.32%
CountryUS
Employees89,528
SectorConsumer Defensive
Sector Strength42
IndustryPackaged Foods
Share Statistics
EPS (TTM)0.45
Shares Outstanding3,406,972,400
10 Day Avg. Volume182,531
30 Day Avg. Volume230,222
Financial Highlights & Ratios
PEG Ratio-2.11
Price to Book (P/B)2.92
Price to Sales (P/S)1.88
P/FCF Ratio18.87
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue2.29
Enterprise Value/Gross Profit8.59
Enterprise Value/Ebitda-8.39
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.94
Revenue Forecast (FY)$33.14B
Danone SA Business Overview & Revenue Model
Company DescriptionDanone SA (DANOY) is a multinational food-products corporation headquartered in Paris, France. The company operates in several sectors, primarily focusing on dairy products, plant-based products, water, and specialized nutrition. Danone's core offerings include yogurt, milk, infant formula, and medical nutrition products, catering to a diverse consumer base while emphasizing health and wellness. The company is committed to sustainability and aims to contribute to a healthier world through its products and initiatives.
How the Company Makes MoneyDanone generates revenue through multiple key streams, primarily from the sale of its dairy and plant-based products, which include yogurts and cheese, as well as bottled water and nutrition products. The company leverages strong brand recognition and innovation to drive sales across its product lines. In addition, Danone's specialized nutrition segment, which includes infant formula and medical nutrition, represents a significant revenue source, catering to both health-conscious consumers and those with specific dietary needs. Strategic partnerships with retailers and distributors enhance Danone's market reach. The company's commitment to sustainability and health-oriented products aligns with current consumer trends, contributing positively to its revenue growth.
Danone SA Earnings Call Summary
Earnings Call Date:Feb 20, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 29, 2026
Earnings Call Sentiment Positive
The call presented a predominately positive operational and financial performance for FY25: like-for-like sales growth (+4.5%), margin expansion (+44 bps to 13.4%), EPS growth (+4.6% to EUR 3.80), strong free cash flow (EUR 2.8bn) and improved ROIC (10.7%). Strategic highlights included platform scale-ups (Oikos PRO, Alpro), Medical Nutrition M&A (Kate Farms ~ $500m), sustainability milestones (B Corp, CDP Triple A) and supply-chain recognition. Against this backdrop, notable near-term challenges were the Infant Milk Formula recalls (estimated one-off Q1 sales impact ~0.5%–1.0%), North American underperformance, currency headwinds and some H2 margin phasing pressures from ingredient inflation. Management framed these as addressable (targeted investments, leadership changes, capacity expansion and confidence in FY26 guidance). Overall, positives (broad-based growth, cash generation, strategic milestones) outweigh the lowlights, which are significant but largely short- to medium-term in nature.Q4-2025 Updates
Positive Updates
Solid Like-for-Like Sales Growth
Full-year like-for-like sales grew +4.5% (Q4 +4.7%), driven by volume/mix (+2.7% FY; +2.5% Q4) and price (+1.8% FY; +2.1% Q4). Reported sales were broadly stable at EUR 27.3bn after currency and scope effects.
Improved Profitability and EPS
Recurring operating margin expanded by +44 basis points to 13.4% and recurring EPS rose +4.6% to EUR 3.80, close to an all-time high.
Strong Cash Generation and ROIC
Free cash flow of EUR 2.8 billion for 2025 and Return on Invested Capital improved to double-digit (10.7%), up ~62 basis points year-on-year.
Category and Platform Momentum
Specialized Nutrition grew +7.4% like-for-like; EDP +3.5%; Waters +1.9%. High-protein platforms performed strongly globally (Oikos PRO exceeded EUR 1bn), Alpro became a EUR 1bn platform, and Fortimel/Nutrison Medical Nutrition reached ~EUR 1bn.
Regional Standouts — CNAO and Emerging Markets
China, North Asia & Oceania (CNAO) delivered exceptional LFL growth of +11.7%, driven by volume (+12%). Latin America grew +6% LFL and AMEA +5.6% LFL, all finishing the year strongly.
Strategic M&A and Portfolio Moves
Acquisition of Kate Farms helped build a US Medical Nutrition platform (~$500m) and an additional 1% stake in Australian JV raised ownership to 51% (financial consolidation). Integration and scale gains already showing strong growth for Kate Farms.
Sustainability & Operations Recognition
Worldwide B Corp certification achieved; CDP Triple A recognition retained. Supply chain ranked 10th in Gartner Top 25 Supply Chains; Industry 5.0 Academy upskilling 20,000 employees and 10 factories piloting digital factory capabilities.
Dividend Increase
Proposed dividend of EUR 2.25 per share, up ~5% versus prior year, aligned with EPS growth.
Negative Updates
Infant Milk Formula (IMF) Recalls and Short-Term Impact
Recalls of certain IMF batches in Europe and the Middle East led to shelf disruption and consumer concern. Management estimates a one-off Q1 net sales impact of c.0.5%–1.0% (50–100 basis points at group level). Most recalled batches were sold in 2025 and returns have not yet been significant.
Underperformance in North America
North America did not meet expectations: Q4 like-for-like growth was only +0.7% (driven by price +1.3%) with weak volumes. Full-year North America grew +2.0% LFL and recurring operating margin fell by 39 bps to 11%. Management signaled organizational and portfolio actions to rebuild growth.
EDP Profitability Lagging vs. Ambition
Edible Dairy & Plant-based (EDP) is delivering growth (+3.5% LFL) but profitability has not yet reached the targeted double-digit margin profile; management is reinvesting gross margin gains to fuel sustainable innovation and regain competitiveness.
Currency and Scope Headwinds
Negative currency translation impacted sales by c.-4.4%, and scope effects were slightly negative at -0.4% (deconsolidation of Horizon Organic partly offset by Kate Farms), moderating reported growth (+/- resulted in stable reported sales).
Input Inflation and H2 Gross Margin Phasing
Material inflation (notably dairy ingredients such as whey and lactose) affected the H2 gross margin phasing due to hedging timing, contributing to a sequential slowdown in gross margin expansion in the second half.
Shelf Disruption and Reputational Risk Uncertainty
Although management reported no alarming trends in consumer complaints historically and early market-share data is reassuring, the IMF recalls create reputational risk and require active consumer/healthcare engagement to rebuild trust; long-term impact remains uncertain.
Company Guidance
Danone guided 2026 net sales like‑for‑like growth of +3% to +5% with recurring operating income expected to grow faster than sales, while flagging a one‑off Q1 sales headwind of ~0.5–1.0% (50–100 bps) from Infant Milk Formula recalls that management expects to normalize through March; they expect North America recovery to pick up from Q2 (easier coffee‑creamer comps) and plan to include Kate Farms in like‑for‑like from Q3. Capital deployment will modestly step up to support capacity (CapEx around 4–4.5% of sales), the board will propose a dividend of EUR 2.25 per share (~+5%), and management reiterated the ambition to keep ROIC sustainably in double‑digit territory (ROIC was 10.7% in 2025). This guidance is set against FY25 results of +4.5% LFL sales (volume/mix +2.7%, price +1.8%), recurring operating margin up 44 bps to 13.4%, recurring EPS EUR 3.80 (+4.6%), and EUR 2.8bn free cash flow.Danone SA Financial Statement Overview
Summary
Stable, mature financial profile with steady operating profitability (2025 EBIT margin ~13.4%) and consistently positive free cash flow, but limited top-line momentum (2025 revenue down ~4.2%), only moderate cash-flow coverage of debt (2025 OCF/total debt ~24.8%), and mixed profitability/returns over the cycle.Income Statement
Revenue has been broadly flat-to-down over the last several years, with 2025 showing a notable decline (-4.2%). Profitability is steady at the operating level (2025 EBIT margin ~13.4%), and net margin improved versus 2022–2023 (2025 ~6.7% vs ~3% range), but remains below 2020–2021 levels (~8%). Overall: resilient operating profitability, but limited top-line momentum and some earnings volatility across the cycle.66
Positive
Balance Sheet
Leverage looks manageable for a mature packaged foods business, with debt-to-equity consistently around ~0.8–1.0 (2025 ~0.89). Equity and assets are relatively stable, suggesting balance sheet consistency, but the company is not meaningfully deleveraging and debt remains sizable. Returns on equity were solid in 2024 (~11.4%) versus weaker 2022–2023 (~5% range), indicating improving profitability but still mixed performance over time.64
Positive
Cash Flow
Cash generation is solid with free cash flow positive each year, but momentum softened in 2025 (free cash flow growth -8.8% after growth in 2023–2024). Free cash flow covers a meaningful portion of earnings (2025 ~72% of net income), which supports quality of profits, though operating cash flow relative to total debt is modest (~25–31% historically; 2025 ~24.8%), implying debt paydown capacity is reasonable but not strong.58
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 26.21B | 27.38B | 27.62B | 27.66B | 24.28B |
| Gross Profit | 0.00 | 13.61B | 13.08B | 12.74B | 11.52B |
| EBITDA | 3.52B | 4.77B | 4.75B | 4.25B | 4.15B |
| Net Income | 1.75B | 2.02B | 881.00M | 959.00M | 1.92B |
Balance Sheet | |||||
| Total Assets | 45.05B | 45.29B | 44.49B | 45.28B | 45.42B |
| Cash, Cash Equivalents and Short-Term Investments | 6.57B | 6.16B | 6.00B | 4.68B | 5.86B |
| Total Debt | 15.11B | 14.56B | 15.60B | 14.60B | 16.30B |
| Total Liabilities | 28.09B | 27.44B | 28.26B | 27.29B | 28.05B |
| Stockholders Equity | 16.91B | 17.80B | 16.18B | 17.92B | 17.27B |
Cash Flow | |||||
| Free Cash Flow | 2.62B | 2.91B | 2.60B | 2.09B | 2.43B |
| Operating Cash Flow | 3.63B | 3.83B | 3.44B | 2.96B | 3.47B |
| Investing Cash Flow | -1.70B | -463.00M | -834.00M | -749.00M | 561.00M |
| Financing Cash Flow | -1.54B | -3.82B | -2.06B | -1.93B | -4.03B |
Danone SA Technical Analysis
Positive
18.20
Price Trends
17.20
Negative
17.52
Negative
17.11
Negative
Market Momentum
0.05
Negative
53.06
Neutral
47.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DANOY, the sentiment is Positive. The current price of 18.2 is above the 20-day moving average (MA) of 16.66, above the 50-day MA of 17.20, and above the 200-day MA of 17.11, indicating a neutral trend. The MACD of 0.05 indicates Negative momentum. The RSI at 53.06 is Neutral, neither overbought nor oversold. The STOCH value of 47.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DANOY.
Danone SA Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $24.24B | 9.81 | 27.29% | 5.19% | -5.65% | 0.41% | |
68 Neutral | $14.19B | 29.70 | 6.02% | 4.82% | 1.55% | -40.81% | |
63 Neutral | $54.99B | 26.58 | 10.94% | 2.61% | 1.11% | 84.32% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
61 Neutral | $11.67B | ― | -17.44% | 4.45% | -0.66% | -326.55% | |
60 Neutral | $8.13B | 14.11 | 14.82% | 5.64% | 2.71% | 4.90% | |
54 Neutral | $29.33B | -4.97 | -12.87% | 6.75% | -3.70% | -431.05% |
* Consumer Defensive Sector Average
DANOY
Danone SA
17.08
2.82
19.78%
CPB
Campbell Soup
26.86
-11.27
-29.55%
GIS
General Mills
44.93
-12.80
-22.17%
HRL
Hormel Foods
24.82
-2.57
-9.39%
SJM
JM Smucker
116.00
9.75
9.18%
KHC
Kraft Heinz
24.57
-4.41
-15.22%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.