Nestlé: Swiss Franc Fueled Rally - Margin Turnaround Next?

Florian Muller1.12K FollowersFollow5ShareSavePlay(8min)CommentsSummaryNestlé (OTCPK:NSRGY) remains a solid Buy, supported by sustainable dividends and a favorable valuation gap versus historical multiples. Recent margin pressure stems from elevated coffee and cocoa input costs, but easing commodity prices and aggressive cost savings support a mid-term margin rebound. Free cash flow conversion has moderated, lowering the DCF spot estimate to CHF 90-100 versus a share price of still under CHF 80. Dividends remain well covered. Leverage has risen due to buybacks, but buybacks are cooling and debt metrics are still within industry norms. Nevertheless, a halt to leveraging should become a priority. HJBC/iStock Editorial via Getty Images Nestlé ADRs are up almost 20% including dividends since late January, which raises the question whether there lies further upside in the Swiss food giant. First, most of this USD-denominated return comes from a This article was written byFlorian Muller1.12K FollowersFollowExcellent academic Finance background and Finance professional with over five years of cumulative experience in Consulting & Audit Firms including a professional Valuation position, FP&A and Controlling positions, and Financial writing.My approach is mostly value-oriented. However, valuation is rarely an appropriate short- to mid-term timing indicator, but rather hints at long-term chances or risks. In my pieces, I assign the written word and data presented more value than a simple rating and might often rate hold/neutral, even when my inclination is bullish or bearish. Rating systems do not consider time horizons or investment strategies. My articles aim to inform, not to make decisions.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.