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Analysis before buying or selling Sodexo shares

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The Sodexo share has recently been reinstated in the French national stock market index CAC 40. You can therefore trade it online through a PEA or a stock account. But before you get started, take a few moments to read the article we have devoted to this stock, which will provide you with the elements you need to set up effective analyses of this stock, such as the main stock market data, the detailed activities of this company, its direct competition, its economic history, as well as a historical technical analysis of its price.

Elements to consider before selling or buying Sodexo shares

Analysis N°1

Sodexo's stock is considered a defensive stock because more than two-thirds of the company's revenues are generated in sectors that are not very sensitive to economic conditions.

Analysis N°2

However, we know that the company's activities are very sensitive to certain world events such as the World Cup, the Olympic Games or the Euro football tournament. Therefore, it is also necessary to take these events into account.

Analysis N°3

We will also be watching for budget cuts among the vast majority of Sodexo's clients, which will of course have an impact on sales. On the other hand, the group is also sensitive to food cost inflation.

Analysis N°4

The annual results and their progress are of course also important. It goes without saying that the achievement of the company's short-term objectives will have an impact on investor sentiment and thus on its share price.

Analysis N°5

Finally, we will keep an eye on the group's main competitors who are most likely to gain market share and therefore penalize the Sodexo group with the publication of results but also the various contracts signed.

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General presentation of Sodexo

The Sodexo Group is currently the international leader in its sector of activity, i.e., Foodservices and corporate services. But its business is much more diversified than it appears and here are the details:

The majority of Sodexo's business is the sale of on-site service solutions such as food preparation, restaurant, reception and conference center management, reception services, mail processing, transportation, cleaning, gardening, technical maintenance, security, facilities management and health monitoring. This part of its activities alone represents 96.2% of the group's total turnover. 31.8% of these services are provided to government agencies, 22.6% to schools and universities, 20% to healthcare institutions, 6% to retirement homes, 4.6% to sports and cultural events, 3.7% to defense and 3.4% to prisons. The Sodexo Group offers its services in various countries such as the United Kingdom, Ireland, Continental Europe, North America and the rest of the world.

Finally, 3.8% of Sodexo's revenues are generated by the sale of incentive solutions such as vouchers and service cards, which benefit more than 35 million people worldwide.

Sodexo generates 13.4% of its revenues in France, 40.8% in the United States, 10.1% in the United Kingdom and 35.7% in the rest of the world, mainly in Europe. The Group employs 425,594 people worldwide.

Analysis before buying or selling Sodexo shares
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The major competitors of Sodexo

If a good knowledge of Sodexo and its activities is essential to any analysis of this stock on the stock market before buying or selling, you must also know the main adversaries of this group in its sector of activity. We suggest that you find out who Sodexo's biggest competitors are on the market today:

Elior Group

First of all, the most important competitor of Sodexo today is of course Elior, another French multinational company operating in the catering and services sector. This company is currently established in France but also in 5 other countries in the world and on three continents with Spain, the United States, India, Italy and the United Kingdom. The Elior group currently operates through two major activities

Compass Group

This other company is a British company that owns the subsidiary Compass Group France, a French contract catering company. It is the world's leading contract catering company today. Its subsidiary Compass Group France operates in the public and private sectors through the brands Eurest for companies and administrations, Medirest for the health sector, Mediance for hospital cafeterias, Scolarest for education and local authorities, Levy Restaurants for event catering in the fields of entertainment, sport and leisure, and Exalt for creative catering in companies

Newrest

This company is an industrial catering company which specialises in the airline sector with catering for airlines and VIP flights and on the ground with the Caffé Lindo, E-Café and Sky Café brands, and in the railway sector with the SNCF TGV bar, the maritime sector and communities such as embassies, schools, private companies and hospitals. The company's head office is based in Toulouse, France. The Newrest group currently employs over 23,000 people worldwide and generates over €1 billion each year. The group currently has an international presence, operating in 49 countries around the world and employing 32,000 people.

Dupont Restauration

Finally, the last serious competitor to Sodexo that you need to consider is the Dupont Restauration group, which is currently the fifth largest contract catering company in France. It has a turnover of more than 260 million euros and employs nearly 3,000 people. The group has over 800 restaurants under management and serves 750,000 meals every day.


The major partners of Sodexo

Of course, the Sodexo Group owes its success to the establishment of numerous partnerships, mostly in the form of renewable service contracts signed with public companies. For this reason, there are few partnerships between this company and other private sector companies.

Colombus Café & Co

Sodexo recently signed an agreement with Colombus Café & Co to offer coffee shop facilities to Sodexo's institutional clients. This is a way for Sodexo to further expand its presence in the market and complete its offer of practical services.

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Positive factors for Sodexo shares
The factors in favour of a rise in the Sodexo share price:

The first advantage of the Sodexo Group is of course its positioning in its core business, which is quality of life services at its clients' sites. The group is indeed the world leader in this field and generates more than 97% of its revenues through these activities. It should be remembered that the company's historical business is solely concerned with its offer of benefits and rewards services through luncheon vouchers or gift vouchers.

Another undeniable advantage of the Sodexo Group is its position in the international foodservice market. This market has a very high potential, estimated at more than 700 billion euro. Of this amount, only 40% of services are outsourced. It goes without saying that the Sodexo Group is one of the first to take advantage of this market.

We also appreciate the good distribution of the Group's activities throughout the world. For example, Sodexo currently generates 42% of its business in the United States, compared to only 30% in Western Europe. The United Kingdom alone generates more than 12% of activities.

Analysts specializing in the stock market also emphasize the undeniable quality of the strategy implemented by Sodexo since 1966, which is based on independence from clients, suppliers and banks, with activities that are not capital intensive and investments limited to 2% of revenues. The group thus has significant cash at its disposal, which it uses for more global contracts with multinational companies such as Nokia, or for multi-country contracts focused on facilities management services, which generate 28% of revenues.

The Sodexo Group has also recently completed a complete clean-up of its contract portfolio and has achieved differentiating expertise in integrated facility management with a unique multi-country service offering for its international clients that has proven to be successful.

Investors are also attracted to this stock, which, let's remember, has had one of the best historical performances in the market on the results of the last 15 years, which allowed it to enter the composition of the French CAC 40 index in 2016.

Finally, the company's strengths include its rather solid financial situation, which allows it to make strategic targeted acquisitions or return cash to shareholders through recurring share buyback programs.

Negative factors for Sodexo shares
The factors in favour of a drop in the Sodexo share price:

First, it is known that the market in which Sodexo operates is a highly competitive one, particularly in the corporate catering business. In addition, the level of outsourcing in this sector is also very high. It should also be noted that the behavior of this market segment is particularly cyclical, which presents a risk for Sodexo.

There has also been a worrying decline in the Group's activities in certain specific markets. This is particularly the case in France, where there has been a significant slowdown for several years, but also in Russia and Latin America, where the market is proving to be particularly difficult with unprofitable contracts.

While Sodexo is well positioned in the corporate market, it is regrettable that it is not involved in commercial foodservices in airports, train stations or on highways. The group is also losing some purchasing power with its suppliers.

As the company carries out a large part of its activities in Brazil and Venezuela, we can also underline that its results are very sensitive to the value of the currencies of these two countries, i.e. the real and the bolivar.

There was also a significant decline in the need for a base of operations in the mining and oil industries, Sodexo's traditional clients, which had a negative impact on the Group's results.

Finally, the Sodexo share is considered a relatively expensive stock for investors as it is currently trading at its historical highs.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.
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