NSRGY changes
Pick any two versions below to diff them.
- Price
- $97.41 → $103.44(+6.2%)
- Discount category
- Well below intrinsic value → Below intrinsic value
- Next earnings
- Oct 22, 2026 → Feb 18, 2027
- Thesis
- The market prices Nestlé as a company that grew for several years mostly from price increases, not from volume, and that now pays for a turnaround with a stretched balance sheet. RIG was only 1.5% in the first half of 2026, and pricing gave more of the growth. Net debt rose to CHF 56.3 billion at June 30, 2026 after a CHF 8.0 billion dividend, so there is little room for buybacks. Restructuring costs and a CHF 1.3 billion write-down on the vitamins business cut net profit by 31.4% in the first half. Other events add doubt: the CEO changed in September 2025, an infant formula recall cut growth in early 2026, and Russia put Nestlé Russia under temporary external administration in September 2026. added: Nestlé stopped consolidating its Russian business at the end of September 2026 and recognized a non-cash charge of about CHF 1.4 billion. For the gap to close, Nestlé must show that volume growth comes back without more price increases. The checks are clear. RIG must removed: keep improving from added: stay near the removed: 1.8% added: 2.8% of added: Q3 2026, up from 1.8% in Q2 2026. Organic growth must stay in the 3% to 4% range for 2026, and the UTOP margin must improve from 2025. Free cash flow must be above CHF 9 billion in 2026. Cost savings must reach CHF 2.0 billion in 2026 and CHF 3.0 billion by the end of 2027. The Peranel water deal (about CHF 2.8 billion of cash) and the vitamins sale must close in the first half of 2027 and reduce net debt. The removed: first evidence comes with the nine-month sales on October 22, removed: 2026, and added: 2026 passed the added: first test. The next evidence comes with the full-year results removed: come in added: on February added: 18, 2027. Because the turnaround depends on volume growth over many quarters, the gap can close only slowly, over the next two to three years. A removed: large loss in Russia or a new drop in volume added: or a delay of the asset sales would delay it.
- Risks
- Volume growth is still low. RIG was 1.5% in the first half of removed: 2026, added: 2026 and added: 1.9% in the first nine months, and coffee growth came mostly from price increases. If consumers buy less after price increases, or move to private labels, Nestlé cannot grow sales without lower prices. Net debt was CHF 56.3 billion at June 30, 2026. The dividend of CHF 8.0 billion a year uses most of the free cash flow, so debt falls only with asset sales. A delay of the Peranel or vitamins deals would keep debt high. On September 17, 2026, Russia put Nestlé Russia under temporary external administration. removed: Nestlé's added: Nestlé stopped consolidating the business at the end of September 2026 removed: guidance does not include its effect. A write-down or added: and recognized a removed: forced sale on bad terms is possible. added: non-cash charge of about CHF 1.4 billion. Russia gave 3% to 4% of UTOP and free cash flow, so this lowers future profit, and Nestlé can lose the assets for good. Coffee and cocoa prices, tariffs and higher transport and energy costs from the Middle East conflict press on margins. The Swiss franc is strong, and Nestlé expects a negative currency effect of about 3% on 2026 sales. The infant formula recall in early 2026 reduced infant nutrition sales by mid-teens in Q1 2026. Nestlé expects these sales to recover by the end of 2026, but a new product-safety problem could hurt trust in the brand.
- Balance sheet
- Cash: CHF 6.1B Debt: CHF 62.8B Net debt: CHF 56.3B Interest cover: 9.1× Debt due within 12 months: CHF 16.3B Ratings: S&P AA- (stable outlook) Nestlé funds itself with bonds and commercial paper in several currencies. Cash is cash and cash equivalents of CHF 3.6 billion plus short-term investments of CHF 2.6 billion at June 30, 2026. Debt is current financial debt of CHF 16.3 billion and non-current financial debt of CHF 46.5 billion. Net debt is the company's net financial debt, which rose from CHF 51.4 billion at December 31, 2025, mostly because of the CHF 8.0 billion dividend paid in the first half. The average cost of net debt was 2.5%. Interest cover is trading operating profit of CHF 6.2 billion divided by net financial expenses of CHF 688 million for the first half of 2026. Assets held for sale were CHF 5.5 billion at June 30, 2026, against CHF 1.7 billion of related liabilities. The Peranel water deal (about CHF 2.8 billion in cash) and the vitamins sale (about $1 billion), both expected to close by the first half of 2027, will reduce net debt. added: On October 22, 2026, Nestlé said that the end of consolidation of its Russian business adds about CHF 0.9 billion to net debt for the end of 2026. The S&P rating is from a Crisil report of June 24, 2026. As of Jun 30, 2026.
- Checkpoints
- Oct 22, 2026: Nine-month sales 2026: RIG and the effect of Russia. removed: Pending. added: Failed. Watch: RIG at or above the 1.8% of Q2 2026 and organic growth for 2026 still in the 3% to 4% range pass; lower RIG, a cut to guidance or a large Russia charge fails. added: Outcome: Q3 2026 RIG rose to 2.8% and Nestlé kept its guidance, but the exit from Russia brought a non-cash charge of about CHF 1.4 billion, which the test counts as a fail. Feb removed: 2027 (estimate): added: 18, 2027: Full-year 2026 results: margin, free cash flow and net debt. Pending. Watch: A UTOP margin above 2025, free cash flow above CHF 9 billion and CHF 2.0 billion of total savings pass; free cash flow below CHF 9 billion or a lower margin fails. Q2 2027 (estimate): Peranel and vitamins deals close. Pending. Watch: Both deals close by mid-2027 and the cash reduces net debt, which passes; a delay or a lower price fails.
- Recent events
- added: Oct 22, 2026: Nestlé reported nine-month 2026 sales of CHF 65.9 billion, flat in Swiss francs. Organic growth was 3.7%, with RIG of 1.9% and pricing of 1.8%. In Q3 2026 alone, organic growth was 4.0% and RIG was 2.8%, with positive RIG in all zones. Nestlé confirmed its 2026 guidance: organic growth of 3% to 4% with faster RIG than in 2025, a better UTOP margin than in 2025 and free cash flow above CHF 9 billion. Oct 22, 2026: Nestlé said that it stopped consolidating its Russian business at the end of September 2026, but stays the legal owner of the assets. Russia gave about 2% of group sales and 3% to 4% of UTOP and free cash flow. Nestlé removed about CHF 1.6 billion of net assets and recognized a non-cash charge of about CHF 1.4 billion. The change adds about CHF 0.9 billion to net debt for the end of 2026. Sep 28, 2026: Nestlé published its aide-mémoire before the nine-month sales of October 22, 2026. It said that its 2026 guidance does not include any financial effect from the situation of its operations in Russia, which it continues to evaluate. Sep 18, 2026: Nestlé said that a Russian presidential decree placed Nestlé Russia under temporary external administration. It said that it is assessing its options and will protect its rights. Reports said that the decree covers six production sites. Sep 1, 2026: Nestlé agreed to sell its mainstream vitamins, minerals and supplements business, including Nature's Bounty and Puritan's Pride, to Yellow Wood Partners for about $1 billion. The business had sales of about CHF 1.0 billion in 2025. Nestlé keeps premium brands such as Solgar and Pure Encapsulations. It expects to close the sale by the first half of 2027. Jul 23, 2026: Nestlé reported first-half 2026 sales of CHF 43.1 billion, down 2.5% in Swiss francs. Organic growth was 3.6%, with RIG of 1.5% and pricing of 2.1%. The UTOP margin was 16.4%, and free cash flow rose 46.3% to CHF 3.4 billion. Net profit fell 31.4% to CHF 3.5 billion because of restructuring costs and a CHF 1.3 billion write-down on businesses held for sale. Nestlé confirmed its 2026 guidance. Jul 23, 2026: Nestlé and Platinum Equity agreed to create Peranel, a 50:50 joint venture for Nestlé's waters and premium beverages. The deal gives the business an enterprise value of EUR 4.9 billion and gives Nestlé about CHF 2.8 billion in cash at closing, expected in the first half of 2027. Apr 23, 2026: Nestlé reported first-quarter 2026 sales of CHF 21.3 billion. Organic growth was 3.5%, with RIG of 1.2%. The infant formula recall reduced organic growth by about 0.9 percentage points. Nestlé confirmed its 2026 guidance.