Prepared for Manish Chopra by Henry Obegi

Sodexo S.A. (SW.PA) — Deep Dive Analysis

Euronext Paris • Contract Catering & Facilities Management • February 2026

Consensus Snapshot

0
Buy Ratings
8
Hold Ratings
1
Sell Ratings
EUR 48.34
Mean Target
Complete capitulation. Zero active Buy ratings among 9 recent analysts. Consensus target of EUR 48.34 is the current price — the sell-side equivalent of "we have no idea." Price targets collapsed 45-50% in 12 months (from EUR 85-95 to EUR 48). This is a rout, not a gradual drift.

Adversarial Thesis Grading

ThesisTypeGradeTimeframe
Valuation mean reversionBull C+12-24 mo
New CEO fixes executionBull D+24-36 mo
FM divestitureBull DSpeculative
Margin improvementBull D+18-24 mo
Dividend protectionBull B-Ongoing
Structural inferiority to CompassBear B-Permanent
NA secular declineBear C (REFUTED)Company-specific
Family governance dragBear C+Permanent
Pluxee value destructionBear BSunk cost

Key Claims — Independently Verified

ClaimVerdictNotes
"Compass premium is historically ~40%, now ~120%" VerifiedPre-COVID: 25-55% premium. Current 120% is unprecedented.
"FCF yield is ~9.5%" Partially VerifiedReported FCF yield = 6.6%. Normalized (ex tax one-off) = 8.5-9.3%.
"North America is in secular decline" REFUTEDCompass grew NA +7.3%, Aramark +6% in same market. Sodexo-specific, not market.

What the Consensus is Missing

1. Rest of World growth: +10.2% organic in Q1 FY2026 (India, Brazil, Australia). Nobody is valuing this segment.
2. NA weakness is company-specific (fixable): Compass and Aramark grow 6-7% in the same market. Consensus treats it as permanent — wrong diagnosis.
3. FCF yield is PE territory: Normalized ~8.5-9.3%. A PE firm would see a stable, cash-generative business with identifiable improvement levers. Family control blocks a take-private, but the valuation is below PE levels.
4. Zero probability assigned to improvement: Even modest 30bps margin improvement = ~EUR 72m additional operating profit = ~EUR 50m net income = ~7% EPS growth. The consensus assigns zero probability to this.

Verdict on Analyst Quality

Mediocre and herd-like. Every analyst runs the same Sodexo-vs-Compass framework. Nobody asks contrarian questions. Targets cluster suspiciously at the current price. Stale Buy ratings from early 2025 pollute the broader consensus.

Most rigorous: UBS (Ivar Billfalk-Kelly) — correctly identified "investment year" risk.
Least rigorous: Berenberg — maintained Buy with EUR 71 PT while stock was in freefall.