Sodexo Deep Dive

DCF Model (Base Case: WACC 8.0%, g 2.0%)

8.0%

WACC (adj. for execution risk)

2.0%

Terminal Growth

EUR 83

Unrisked DCF Value

EUR 56

Risked DCF Value

WACC Components

Component	Value	Justification
Risk-free rate	3.0%	Blended Bund (2.71%) + partial France premium
Equity risk premium	5.5%	Blended global (48% NA, 38% Europe, 14% EM)
Beta	0.85	Industry re-levered (0.70 unlevered * 1.53 leverage adj.)
Cost of equity	7.7%	Rf + Beta * ERP
Cost of debt (after-tax)	3.0%	4.0% pre-tax * (1 - 25%)
D/V weight	28%	EUR 2.7bn / EUR 9.7bn total capital
Calculated WACC	6.4%	Mechanical output
Applied WACC	8.0%	+160bps for execution risk / transition uncertainty

Sensitivity: Equity Value per Share (EUR)

WACC \ g	1.0%	1.5%	2.0%	2.5%	3.0%
7.0%	EUR 91	EUR 97	EUR 105	EUR 114	EUR 126
7.5%	EUR 82	EUR 87	EUR 93	EUR 101	EUR 110
8.0%	EUR 74	EUR 78	EUR 83	EUR 89	EUR 96
8.5%	EUR 67	EUR 71	EUR 75	EUR 80	EUR 85
9.0%	EUR 62	EUR 65	EUR 68	EUR 72	EUR 76
9.5%	EUR 56	EUR 59	EUR 62	EUR 65	EUR 69
10.0%	EUR 52	EUR 54	EUR 56	EUR 59	EUR 62

Every single cell is above the current price of EUR 48. Even at WACC 10.0% and g 1.0%, the floor is EUR 52. The market is implying a WACC >10% with zero terminal growth — extremely punitive for a BBB+ company with 13% ROIC.

Comparable Company Multiples

Method	Implied Value	vs. Current
Peer Median Multiples (adjusted)	EUR 63	+31%
Historical Multiples (adjusted for Pluxee)	EUR 66	+38%
Compass Discount — 40% (historical)	EUR 71	+48%
Compass Discount — 50% (current)	EUR 59	+23%

Sum-of-Parts (FM Divestiture)

Segment	Revenue (EUR bn)	EBITDA (EUR m)	Multiple	EV (EUR m)
Food Services	~15.9	~1,100-1,150	10-12x	11,000-13,800
Facilities Mgmt	~8.2	~350-400	6-7x	2,100-2,800
Total EV				13,100-16,600
Equity per share (mid)	EUR 80

Current price implies the market values FM at negative value, or food at only 7.5x EBITDA (vs Compass 12.7x).

Scenario Analysis

Scenario	Prob.	12-Mo Target	3Y Target	P/E	Margin
Bear	25%	EUR 42	EUR 40	9x	4.5%
Base	50%	EUR 56	EUR 72	12.5x	5.0%
Bull	25%	EUR 74	EUR 98	15x	5.5%
Weighted	100%	EUR 57	EUR 71	-	-

Reverse DCF — What EUR 48 Implies

Implied Perpetuity FCFFEUR 606m

Implied Perpetuity UOP Margin3.2%

Last time margin was this lowFY2021 (COVID)

Unreasonably pessimistic. A 3.2% perpetuity margin implies all efficiency gains reverse, the outsourcing trend provides zero growth, and Sodexo deteriorates to Elior-level economics — a company that was effectively taken private due to chronic underperformance.

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

DCF Model (Base Case: WACC 8.0%, g 2.0%)

WACC Components

Sensitivity: Equity Value per Share (EUR)

Comparable Company Multiples

Sum-of-Parts (FM Divestiture)

Scenario Analysis

Reverse DCF — What EUR 48 Implies