Nestle Is Criminally Underrated As A Wealth-Creating Engine By Wealth Insights

"Summary

• Nestle flies under the radar compared to many of its peers in the consumer goods sector.
• Despite this, it has been a strong performer over the long term due to the company's depth of quality brands, strong balance sheet, and robust cash flow.
• Shares have rocketed higher over the past year and are now overvalued. Nestle is a fantastic long-term holding if acquired at the right valuation.

One of the largest mysteries of the stock market to me is how vastly underrated Nestle (OTCPK:NSRGY) continues to remain among the investment community. The reasoning behind this ranges from light coverage in investing communities such as Seeking Alpha itself to the fact that institutional ownership is just 3%. Whether it's due to Nestle's foreign ownership (based in Switzerland) or the company's non-flashy product portfolio, many investors are missing how effective it has been at generating wealth. The company boasts a vastly diverse brand portfolio that is filled with high market share positions. In addition, it boasts strong cash flows and a strong balance sheet. These tools help the company simultaneously invest in growth and return cash to shareholders.

Nestle's many brands can be sifted through here, and are broken up into several product categories listed below. The company cleared 91 billion Swiss francs ($91.91 billion USD) in 2018 and offers some of the most well-known brands of consumer goods on the market. These include Gerber, Nestle Pure Life water, Poland Spring, Nesquick, Cheerios, Toll House, Nespresso, Coffee-Mate, Hot Pockets, DiGiorno, Lean Cuisine, Nestea, Milo, Boost, Haagen-Dazs, Purina, Fancy Feast, and many more.

(Source: Nestle)

Performance Overview

(Source: YCharts)

Nestle's is one of the world's largest consumer products companies with a massive market cap of $280 billion. When your business entails selling high volumes of low-cost goods such as water, pet food, and frozen dinners, growth can be difficult to achieve at such a high scale. In addition, Nestle is the owner of many brands that can come and go as divestitures and acquisitions. Over the past decade, revenues have contracted at a CAGR of -1.79% and EPS at a CAGR of -3.58%. Although, 2018 was a return to growth with 3.0% organic sales growth and underlying EPS growth of 13.9%. We will discuss the company's growth drivers more later."

... Read the full post on Wealth Insight's blog.

Author Bio:

This article was written by Wealth Insights. A well-known investment author on Seeking Alpha with over 6,000 followers.

Steem Account: @wealth-insights

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