Sodexo SA (SDXAY) AI Stock Analysis

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Sodexo SA

(OTC:SDXAY)

68Neutral

Sodexo SA's overall stock score reflects solid financial health with strong revenue growth and profitability, offset by challenges in North America and delayed healthcare contracts. The technical analysis suggests caution due to downward momentum, but reasonable valuation and dividend yield provide some support. Continued focus on overcoming regional challenges and leveraging new contracts will be crucial for future performance.

Sodexo SA (SDXAY) vs. S&P 500 (SPY)

Market Cap

$9.36B

Dividend Yield3.04%

Average Volume (3M)15.82K

Price to Earnings (P/E)12.9

Beta (1Y)0.33

Revenue Growth5.85%

EPS Growth136.72%

CountryUS

Employees317,177

SectorIndustrials

Sector Strength89

IndustrySpecialty Business Services

Share Statistics

EPS (TTM)0.67

Shares Outstanding737,274,960

10 Day Avg. Volume0

30 Day Avg. Volume15,818

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)2.99

Price to Sales (P/S)0.00

P/FCF Ratio11.74

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Sodexo SA Business Overview & Revenue Model

Company DescriptionSodexo SA (SDXAY) is a global leader in quality of life services, providing a wide array of services across various sectors including food services, facility management, and employee benefits. The company operates in over 50 countries, serving diverse industries such as education, healthcare, corporate, and government services. Core offerings include on-site services like catering and cleaning, as well as benefits and rewards services that enhance employee engagement and performance.

How the Company Makes MoneySodexo SA generates revenue primarily through its on-site services and benefits & rewards services. On-site services account for the majority of its income, comprising services like catering, facilities management, and maintenance offered to clients in various sectors such as corporate, healthcare, and education. Revenue is typically generated from long-term contracts with clients, ensuring a steady income stream. Additionally, the company's benefits & rewards services provide employee incentive solutions like meal vouchers and gift cards, which are used by businesses to enhance employee satisfaction and motivation. Significant partnerships with corporations and public institutions further bolster Sodexo's revenue, as these collaborations expand its service reach and client base.

Sodexo SA Financial Statement Overview

Summary

Sodexo SA demonstrates solid financial health with growing revenues and improving profitability metrics. The balance sheet shows moderate leverage, which is manageable, but declining equity might pose a risk if not addressed. Strong cash flow generation supports the company's operations and investments. Overall, the company is on a positive trajectory, but careful attention to equity and cost management is advisable for sustained growth.

Income Statement

Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
23.80B	22.64B	21.13B	17.43B	19.32B
	Gross Profit
2.85B	2.72B	3.04B	2.42B	2.48B
	EBIT
1.10B	847.00M	1.05B	529.00M	141.00M
	EBITDA
1.65B	1.40B	1.29B	950.00M	1.04B
	Net Income Common Stockholders
168.00M	794.00M	695.00M	139.00M	-319.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.20B	2.02B	3.23B	3.59B	2.07B
	Total Assets
15.02B	20.79B	20.92B	18.99B	17.35B
	Total Debt
5.47B	6.38B	6.66B	7.03B	6.36B
	Net Debt
3.33B	4.36B	3.44B	3.49B	4.33B
	Total Liabilities
11.23B	16.24B	16.50B	15.82B	14.58B
	Stockholders Equity
3.78B	4.54B	4.42B	3.17B	2.76B
Cash Flow		Free Cash Flow
962.00M	1.04B	690.00M	686.00M	234.00M
	Operating Cash Flow
1.32B	1.38B	1.03B	982.00M	632.00M
	Investing Cash Flow
-1.05B	-526.00M	-386.00M	-303.00M	-430.00M
	Financing Cash Flow
-1.35B	-646.00M	-1.11B	789.00M	198.00M

Sodexo SA Technical Analysis

Technical Analysis Sentiment

Negative

Last Price12.81

Price Trends

50DMA

13.45

Negative

100DMA

14.36

Negative

200DMA

15.58

Negative

Market Momentum

MACD

-0.14

Negative

RSI

50.55

Neutral

STOCH

88.91

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SDXAY, the sentiment is Negative. The current price of 12.81 is above the 20-day moving average (MA) of 12.62, below the 50-day MA of 13.45, and below the 200-day MA of 15.58, indicating a neutral trend. The MACD of -0.14 indicates Negative momentum. The RSI at 50.55 is Neutral, neither overbought nor oversold. The STOCH value of 88.91 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SDXAY.

Sodexo SA Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
UNF	80 Outperform	$3.25B	22.61	7.17%	0.73%	5.04%	31.69%
RTO	75 Outperform	$11.70B	30.03	7.44%	2.20%	3.96%	-17.48%
ABM	74 Outperform	$3.28B	41.25	4.46%	1.87%	2.81%	-67.57%
CBZ	73 Outperform	$4.03B	50.43	6.25%	―	32.27%	-40.50%
ARMK	71 Outperform	$10.22B	30.01	11.77%	1.02%	-3.47%	-45.03%
SDXAY	68 Neutral	$9.36B	12.92	16.21%	3.04%	5.85%	136.72%
Sector *	64 Neutral	$4.43B	12.01	5.15%	249.50%	3.98%	-11.60%

* Industrials Sector Average

Performance Comparison

SDXAY

Sodexo SA

12.85

-4.18

-24.54%

ABM

ABM Industries

52.64

6.28

13.55%

CBZ

CBIZ

74.13

-4.59

-5.83%

UNF

UniFirst

187.32

24.38

14.96%

ARMK

ARAMARK Holdings

39.25

6.79

20.92%

RTO

Rentokil Initial

23.37

-3.54

-13.15%

Sodexo SA Earnings Call Summary

Earnings Call Date:Apr 04, 2025

(Q2-2025)

% Change Since: -0.23%|

Next Earnings Date:Oct 24, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with several achievements such as revenue growth, strong business development, and cost management efforts. However, these were offset by significant challenges in North America, delays in healthcare contracts, and a general revision of growth guidance. The company remains committed to addressing these issues while maintaining long-term strategic goals.

Q2-2025 Updates

Positive Updates

Revenue and Growth

H1 revenue reached EUR12.5 billion, up 3.1% with organic revenue growth up 3.5%. Food Services continued to outperform, delivering 4.5% organic growth, while FM services grew at 1.7%.

Operating Profit and Margin Improvements

Underlying operating profit rose 6.4%, with a 10 basis point margin improvement, and underlying net profit grew by 5.4% to EUR450 million.

Strong Business Development Momentum

Secured over EUR1 billion in new contracts, including cross-sell opportunities, with a retention rate of 93.9% and a development rate of 7.3%.

Global Expansion and Acquisitions

Expansion in the U.S. convenience market with the acquisition of CRH Catering and significant contract wins in healthcare with AtlanticCare and UC Health.

Cost Management and Cash Flow

On track to achieve a leverage ratio between 1 to 2 times by the end of the fiscal year, with progress in Global Business Services project bringing around EUR10 million of savings.

Negative Updates

Guidance Revision

Revised full year guidance from 5.5%-6.5% organic growth to 3%-4%, with 80% of the shortfall concentrated in North America.

Challenges in North America

Particularly weak February results and a negative net new contribution. Delays in ramp-up of new healthcare contracts and lower retention in Corporate Services.

Impact of External Factors

Macroeconomic pressures in Europe affecting facility management projects, and weather-related school closures impacting education volumes.

Healthcare Contract Delays

Significant delay in the Captis healthcare contract ramp-up, expected to start contributing significantly only in fiscal year 2026.

Tax and Financial Concerns

Higher restructuring costs related to the global business service project and a tax reassessment in France impacting cash flow.

Company Guidance

In the first half of fiscal year 2025, Sodexo revised its full year guidance due to lower than expected growth, adjusting its organic growth forecast from an initial 5.5%-6.5% to a more conservative 3%-4%. The revision primarily affects North America, accounting for 80% of the change, with significant challenges in healthcare and education sectors contributing 90 and 60 basis points to the shortfall, respectively. The anticipated revenue from a major healthcare partnership, Captis, will be delayed to fiscal year 2026. Despite these setbacks, Sodexo is intensifying its focus on sales and retention, aiming for a retention rate between 94% and 94.5% and has secured over EUR1 billion in new contracts in H1. The company also reported a 10 basis point improvement in operating margin, reaching 5.2%, and maintains strong cash flow, projecting to achieve a leverage ratio within its target range by year-end. Looking ahead, Sodexo remains confident in its strategy to drive sustainable growth and improve predictability.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.