One-glance verdict
Undervalued
$28.85 our estimate vs market $13.04
55% below our estimate, below the bear case
Fundamentals snapshot
Sodexo S.A.
SDXAY · PNK · Industrials · Specialty Business Services
Current price
$13.04
52-week range
$9.08 - $13.69
Market cap
$9.51B
Balance sheet
Stretched
6.97x Adequate
Net debt $4.87B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 5.1% last year.
- Reward Returns 11.9% on equity, ahead of 20% of its peers.
- Reward Free cash flow was positive in 3/10 years.
- Risk Insider ownership is only 0.0% (peer median: 0.9%).
What this company does
Sodexo S.A.
Sodexo runs food services and manages facilities for other big organizations like corporations, universities, and hospitals. Most of its money comes from long-term contracts for services like operating cafeterias or handling building maintenance, creating a steady stream of recurring revenue (income that's likely to repeat regularly from ongoing customer agreements). This business model is attractive because it depends on stable, long-term relationships rather than many individual, one-time sales.
How the company got here
Sodexo started in 1966 in Marseille, France, when a man named Pierre Bellon decided to create a business that provided food services to company restaurants, schools, and hospitals. The company grew by expanding to other countries in Europe, Africa, and the Middle East, and eventually to the Americas and Asia. A key moment was in 1995 when it bought two other companies, which made it the world's largest food services company at the time. To raise money for more growth, it became a publicly-traded company on the Paris stock exchange, meaning people could buy small pieces (or shares) of the company.
What it actually does
Sodexo is a company that other businesses and organizations hire to manage their food needs and take care of their buildings. Think of the cafeteria in an office building, a hospital, or a university; there's a good chance a company like Sodexo is running it behind the scenes. Beyond food, they also handle a wide range of building services, known as facilities management (the day-to-day tasks required to keep a building running smoothly), which can include everything from cleaning and security to maintaining the heating and cooling systems.
On-site Services: Business & Administrations
This is Sodexo's largest business area, where they provide services to private companies and government agencies. For a corporate office, this could mean running the employee cafeteria, managing the mailroom, and handling reception services. For a large, remote industrial site, it could involve providing meals and managing the living quarters for workers. Companies pay Sodexo for these services so they can focus on their own main business without worrying about the day-to-day logistics of their workplace.
On-site Services: Healthcare & Seniors
Sodexo also serves hospitals, clinics, and senior living communities. In a hospital, they do more than just prepare food for patients; they often design special meals to meet specific dietary needs and also provide food for the hospital's staff and visitors. They also handle non-medical tasks like cleaning and building maintenance, which are critical for keeping a healthcare environment safe and running efficiently. These institutions pay Sodexo to manage these essential support services, allowing doctors and nurses to focus on patient care.
On-site Services: Education
This part of the business focuses on providing services to schools, from kindergarten through university. This includes running the school cafeteria, providing janitorial services, and maintaining the school grounds. For universities, they might also manage the food services in dormitories and for campus events. School districts and universities hire Sodexo to handle these large-scale operations, which helps them provide a better and safer environment for students.
What management is betting on now
The company's current strategy, called "Shift & Grow 2030," is focused on becoming more competitive and growing faster. A major part of this plan is to concentrate on the North American market, which they see as their biggest opportunity for expansion. They are also investing heavily in technology and artificial intelligence (AI) to make their operations more efficient and to better serve their clients. Management is also focused on simplifying how the company operates and empowering its sales teams to win new business and keep existing clients happy.
Price history
How the share price has moved
—
Loading price history…
Is it cheap or expensive?
Fair value $28.85 vs current price $13.04
Our most-likely fair value is $28.85 a share — about 121.3% above today's price of $13.04, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $4.9B. Interest coverage 7.0x.
Net debt
$4.87B
Interest coverage
6.97x
Sodexo S.A.'s profit covers its interest bill about 7.0 times over.
Stretched
Worse cushion
Baseline
Better cushion
SDXAY
BASELINE
Sodexo S.A.
Total debt $6.27B Interest coverage 6.97x This is the baseline the peer rows are being compared against.
Total debt $9.13B Interest coverage 8.72x +25% vs SDXAY Carries about 1.3x more debt cushion than SDXAY.
Total debt $1.88B Interest coverage 3.37x -52% vs SDXAY Carries about 2.1x less debt cushion than SDXAY.
Total debt $2.71B Interest coverage 24.67x +254% vs SDXAY Carries about 3.5x more debt cushion than SDXAY.
Total debt $13.92B Interest coverage 9.45x +36% vs SDXAY Carries about 1.4x more debt cushion than SDXAY.
What you should know
The case for and against SDXAY
3 Rewards
1 Risk
Rewards
-
Revenue grew 5.1% last year.
-
Returns 11.9% on equity, ahead of 20% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Insider ownership is only 0.0% (peer median: 0.9%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
18.37x
Forward P/E
1.82x
P/B
2.29x
P/S
0.40x
EV/EBITDA
12.10x
PEG ratio
3.39x
Profitability
How much profit each dollar creates
Gross margin
11.0%
Operating margin
3.2%
Net margin
1.9%
ROE
11.9%
ROA
3.5%
Health
Liquidity and balance-sheet strength
Debt / equity
1.50x
Current ratio
1.02x
Quick ratio
0.92x
Total debt
$6.27B
Total cash
$1.39B
Growth
How the business has been compounding
Revenue TTM
$27.37B
Revenue 5Y CAGR
8.4%
EPS TTM
0.71
EPS 5Y CAGR
-50.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$1.53B
Free CF TTM
$1.12B
FCF margin
4.1%
Dividend
Shareholder payout
Yield
4.9%
Payout ratio
88.7%
Last ex-div date
2025-12-22