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Sodexo SA Sponsored ADR (SDXAY)
:SDXAY
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Sodexo SA
(OTC:SDXAY)
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Rating:73Outperform
Price Target:
$14.00
▲(12.63% Upside)
Sodexo SA's overall stock score reflects solid financial performance and attractive valuation, which are the most significant positive factors. However, technical indicators suggest mixed momentum, and the earnings call revealed challenges that could impact future growth, particularly in North America and Europe.
Sodexo SA (SDXAY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.06B
Dividend Yield62.44%
Average Volume (3M)4.94K
Price to Earnings (P/E)12.5
Beta (1Y)0.37
Revenue Growth5.85%
EPS Growth136.72%
CountryUS
Employees317,177
SectorIndustrials
Sector Strength72
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.67
Shares Outstanding737,274,960
10 Day Avg. Volume0
30 Day Avg. Volume4,941
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap1.74
Enterprise Value/Revenue0.65
Enterprise Value/Gross Profit5.48
Enterprise Value/Ebitda10.14
Forecast
1Y Price Target
$14.00Price Target Upside12.63% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering0
Sodexo SA Business Overview & Revenue Model
Company DescriptionSodexo S.A. develops, manages, and delivers on-site, benefits and rewards, and personal and home services worldwide. It provides various on-site services, including business and administration, which covers corporate, energy and resources, government and agencies, sports and leisure, and other customers; healthcare and seniors; and education services comprising schools and universities. The company also provides food services; benefits and rewards services, such as employee benefits, incentive and recognition programs, employee mobility, expense management, and public benefits; and personal and home services, including childcare, concierge, and in-home care services. In addition, it offers facility management services, including cleaning, front of house, security, ground maintenance, mailroom, document management, waste management, laundry, transportation, general repairs, technical maintenance, energy management, asset management, and project management services. The company was formerly known as Sodexho Alliance and changed its name to Sodexo S.A. in 2008. Sodexo S.A. was founded in 1966 and is headquartered in Issy-les-Moulineaux, France.
How the Company Makes MoneySodexo generates revenue primarily through three key streams: On-Site Services, Benefits & Rewards Services, and Personal & Home Services. The On-Site Services sector is the largest, encompassing food services, cleaning, maintenance, and other facility management services provided to clients in sectors like healthcare, education, and corporate offices. Benefits & Rewards Services include the provision of employee benefits solutions such as meal vouchers, gift cards, and incentive programs. Personal & Home Services cater to individual consumers, offering services like child care and home assistance. Additionally, strategic partnerships with businesses and governments, as well as contracts with educational institutions and healthcare facilities, play a significant role in driving revenue.
Sodexo SA Earnings Call Summary
Earnings Call Date:Apr 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Sodexo's strong business development momentum, improved operating profit, and resilience in financial positioning. However, these positives were counterbalanced by significant challenges in North America, particularly in healthcare and education sectors, leading to a downward revision in full-year guidance. Macro conditions in Europe added further pressure.Q2-2025 Updates
Positive Updates
Strong Business Development Momentum
Secured over EUR1 billion in new contracts during H1, including cross-sell opportunities, demonstrating solid development momentum.
Increased Operating Profit
Operating profit increased by 6.4%, with a 10 basis point margin improvement to 5.2%.
Resilient Financial Position
Net financial expenses decreased, and a strong cash flow position was maintained, with improvements in working capital and a targeted leverage ratio between 1 and 2 times by the end of the fiscal year.
Organic Revenue Growth in Food Services
Food Services delivered 4.5% organic growth, outperforming Facilities Management Services.
Recognition in Sustainability
Sodexo was recognized by major organizations for leadership in sustainability and responsible business conduct.
Negative Updates
Downward Revision of Full Year Guidance
Full year guidance revised to reflect lower than expected organic growth, now expected between 3% to 4%, down from 5.5% to 6.5%.
Challenges in North America
Significant challenges in North America, accounting for 80% of the guidance revision, with delays in healthcare contract ramp-ups and weaker net new contribution.
Education Sector Shortfall
Education sector faced a shortfall, contributing a 60 basis points impact, due to lower than expected volume growth and student enrollment.
Impact of Macro Conditions in Europe
Ongoing macroeconomic pressures affected Facilities Management in Europe, leading to softer performance.
Tax Reassessment Impact
Exceptional tax outflow related to a tax reassessment in France affected cash flow.
Company Guidance
During the call, Sodexo revised its full-year guidance for fiscal year 2025, now expecting organic growth between 3% to 4%, down from the initial estimate of 5.5% to 6.5%. The revision is largely due to challenges in North America, which account for 80% of the shortfall, including a 90 basis points drag from healthcare delays and a 60 basis points impact from education. Despite weaker-than-expected net new contributions and retention issues, the company remains focused on long-term growth, anticipating a stronger Q4 with a ramp-up of new contracts. Sodexo also reported a retention rate target of 94% to 94.5% and highlighted a EUR1 billion increase in new contracts in H1. The company maintains a strong financial position, expecting a leverage ratio within 1 to 2 times by year-end, and projects a tax rate of 20% to 24% for the year.Sodexo SA Financial Statement Overview
Summary
Sodexo SA shows solid financial health with revenue growth and improved profitability metrics. The balance sheet is stable with moderate leverage, but declining equity could limit future flexibility. Strong cash flow generation supports operations, though a slight decline in free cash flow needs monitoring.Income Statement
Sodexo SA's income statement shows solid revenue growth with a 5.14% increase from 2023 to 2024. Gross profit margin is healthy at 11.96%, and the net profit margin improved significantly from a loss in 2020 to 0.71% in 2024. The EBIT margin has increased to 4.64%, indicating improved operational efficiency. However, the net income is relatively low compared to revenue, suggesting room for improvement in cost management.78
Positive
Balance Sheet
The balance sheet indicates a stable position with a debt-to-equity ratio of 1.45, reflecting a moderate level of leverage. The return on equity stands at 4.44%, suggesting efficient use of equity capital. The equity ratio is 25.16%, showing a balanced asset financing structure. However, the company's equity has decreased over the years, which could limit future financial flexibility.72
Positive
Cash Flow
Sodexo SA's cash flow statement shows a strong free cash flow to net income ratio, highlighting effective cash conversion. Operating cash flow is robust at $1.32 billion, exceeding net income, which indicates strong cash generation from operations. However, there is a slight decline in free cash flow from 2023 to 2024, which needs monitoring.80
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 24.17B | 23.80B | 22.64B | 21.13B | 17.43B | 19.32B |
| Gross Profit | 2.88B | 2.85B | 2.72B | 3.04B | 2.42B | 2.48B |
| EBITDA | 1.55B | 1.65B | 1.38B | 1.30B | 966.00M | 1.01B |
| Net Income | 676.00M | 168.00M | 794.00M | 695.00M | 139.00M | -319.00M |
Balance Sheet | ||||||
| Total Assets | 15.34B | 15.02B | 20.79B | 20.92B | 18.99B | 17.35B |
| Cash, Cash Equivalents and Short-Term Investments | 1.42B | 2.14B | 2.02B | 3.23B | 4.60B | 2.07B |
| Total Debt | 5.61B | 5.47B | 6.38B | 6.66B | 7.03B | 6.36B |
| Total Liabilities | 11.32B | 11.23B | 16.24B | 16.50B | 15.82B | 14.58B |
| Stockholders Equity | 4.00B | 3.78B | 4.54B | 4.42B | 3.17B | 2.76B |
Cash Flow | ||||||
| Free Cash Flow | 667.00M | 962.00M | 1.04B | 690.00M | 686.00M | 234.00M |
| Operating Cash Flow | 1.01B | 1.32B | 1.38B | 1.03B | 982.00M | 632.00M |
| Investing Cash Flow | 554.00M | -1.05B | -526.00M | -386.00M | -317.00M | -430.00M |
| Financing Cash Flow | -1.60B | -1.35B | -646.00M | -1.11B | 803.00M | 198.00M |
Sodexo SA Technical Analysis
Positive
12.43
Price Trends
12.17
Positive
12.48
Negative
13.67
Negative
Market Momentum
0.03
Negative
56.56
Neutral
78.61
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SDXAY, the sentiment is Positive. The current price of 12.43 is above the 20-day moving average (MA) of 12.24, above the 50-day MA of 12.17, and below the 200-day MA of 13.67, indicating a neutral trend. The MACD of 0.03 indicates Negative momentum. The RSI at 56.56 is Neutral, neither overbought nor oversold. The STOCH value of 78.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SDXAY.
Sodexo SA Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | 12.61B | 37.79 | 7.26% | 2.65% | 1.56% | -32.50% | |
73 Outperform | $9.06B | 12.48 | 16.21% | 62.44% | 5.85% | 136.72% | |
70 Outperform | 2.76B | 24.33 | 6.33% | 2.26% | 4.27% | -24.06% | |
67 Neutral | 9.85B | 27.79 | 11.73% | 1.12% | -0.06% | 3.83% | |
66 Neutral | 1.01B | 3.11 | 64.13% | ― | -49.92% | 3773.09% | |
65 Neutral | 3.07B | 32.76 | 5.77% | ― | 46.49% | -25.62% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% |
* Industrials Sector Average
Performance Comparison
SDXAY
Sodexo SA
12.43
-4.52
-26.67%
ABM
ABM Industries
45.11
-5.91
-11.58%
CBZ
CBIZ
56.80
-10.81
-15.99%
PRSU
Pursuit Attractions and Hospitality
35.80
0.80
2.29%
ARMK
ARAMARK Holdings
37.46
0.11
0.29%
RTO
Rentokil Initial
24.78
0.86
3.60%
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.