INVESTMENT ANALYSIS OF THE WORLD'S LARGEST PRODUCER IN FOOD AND BEVERAGES SECTOR
Abstract
The assessment of the financial appeal of investments in stocks and securities is carried out by large specialized firms, but the public information on joint-stock giants is accessible to everyone, so why can no one predict the further course of events in the market? Using the methods of quantitative analysis, it is possible to make an independent forecast of the share prices movement at least for 5 years ahead. The article presents a comprehensive financial and investment analysis of the world's largest food producer using specialized methods for evaluating and comparing businesses.
The investment appeal of the international food company Nestlé is examined, using mathematical methods of economic investment analysis. The result of the study is a short term growth forecast, which can be used for effective investment activity. A comprehensive analysis of the company’s activities across all product verticals is carried out, the main dominant and most promising sectors are identified. Besides, financial indicators are predicted and estimated, including those of organic growth, margin, and EBITDA. The dynamics of the balance and changes in cash flow are also analyzed. Using such valuation methods as DiscountedCashFlow, Asset Pricing Model and WACC Calculation, three scenarios of the of Nestlé shares movement in the stock market are developed.
Our conclusions show, that the company's activities are characterized by: a slow but steady financial growth, artificial redemption of shares to stimulate price growth, market oversaturating with competitors, overpriced stock, a wide variety of portfolio companies.
Our research allows us to determine the investment attractiveness of the shares and recommend holding shares. Industry dynamics exceeds the Group’s reaction and the company`s shares are overvalued. In addition, Nestle has a powerful long-term revenue growth potential, which is confirmed by our calculations.
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