Danone S.A. (BN.PA) | Investment Case

1. Company Snapshot

1.a. Company Description

Danone S.A. operates in the food and beverage industry in Europe, Noram, Latin America, the Asia Pacific, Africa, and the Middle East.The company operates through three segments: Essential Dairy & Plant-Based, Specialized Nutrition, and Waters.It produces and distributes yogurts; milk products; coffee creamers, drinks, and beverages; plant-based products; and ice creams, desserts, and nutritional powdered protein products under the Actimel, Activia, Alpro, Aptamil, Danette, Danio, Danonino, evian, Nutricia, Nutrilon, Volvic, as well as under the licensed brands, including International Delight, Dunkin' Donuts, and Bailey's.

The company also offers specialized nutrition products for pregnant and breastfeeding mothers, infants, and young children under the Aptamil, Nutrilon, Gallia, Cow & Gate, Blédina, Bebelac, Olvarit, and Happy Family Organics brands.In addition, it provides tube feeding products under the Nutrison name; oral nutritional supplements under the Fortimel and NutriDrink names; and hypoallergenic products for children with allergies primarily under the Aptamil ProSyneo, Aptamil Pepti Syneo, and Neocate Syneo names.Further, the company offers water with natural fruit extracts, fruit juice, and vitamins under the evian, Volvic, Aqua, Mizone, Bonafont, Villavicencio, Villa del Sur, Hayat, Sirma, Fontvella, Lanjarón, Salus, Aqua d'Or, and Zywiec Zdroj brands.

It distributes its products through retail chains and traditional market outlets; convenience stores; hospitals, clinics, and pharmacies; and e-commerce.The company was formerly known as Groupe Danone and changed its name to Danone S.A. in April 2009.Danone S.A. was incorporated in 1899 and is headquartered in Paris, France.

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1.b. Last Insights on BN

Danone's recent performance has been impacted by several negative drivers. The company's governance has come under strain due to its attempted takeover of Lifeway Foods, with Danone owning 23% of the US kefir maker and offering $25-27 per share, while Lifeway's stock currently trades at $31. Additionally, Danone faces intense competition in the infant formula market from rivals such as Nestle, Arla Foods, and Reckitt Benckiser Group. Furthermore, the company's Consumer Staples sector performance has been lagging this year, according to a recent report.

1.c. Company Highlights

Last Price	76.18
Change Percentage	0.08%
Open	76.42
Previous Close	76.12
Market Cap ( Millions)	49059
Volume	963278
Year High	80.14
Year Low	63.52
M A 50	76.66
M A 200	73.2

FCF Yield	5.85%
Dividend Yield	2.82%
ROE	10.95%
Debt / Equity	91.65%
Net Debt / EBIDTA	286.07%
Price To Book	3.1
Price Earnings Ratio	26.72
Price To FCF	17.1
Price To sales	1.79
EV / EBITDA	13.72

2. Danone Posts Strong Q1 2025 Earnings with 4.3% Organic Sales Growth

Danone delivered a robust first-quarter performance for 2025, with like-for-like sales growth of 4.3%, surpassing analyst estimates. This growth was driven by a combination of volume/mix (1.9%) and pricing (2.4%), reflecting the company's ability to execute on its health-focused portfolio strategy. Net sales reached €6.8 billion, despite a 0.5% negative currency impact. The company also reported earnings per share (EPS) of €1.89, beating consensus estimates of €1.83. Management reaffirmed its full-year guidance, expecting like-for-like sales growth of 3-5% for 2025. Juergen Esser, CEO, noted, "The strong start to the year reflects our consistent execution and the relevance of our portfolio in a challenging consumer environment."

Publication Date: May -04

                                    📋 Highlights
                                    Strong Sales Growth::
                                                Danone achieved a 4.3% like-for-like sales growth in Q1 2025, driven by volume/mix (1.9%) and price (2.4%).
Regional Performance::
                                                All regions contributed positively, with Europe at 2%, North America at 3.7%, and double-digit growth in China, Latin America, and AMEA.
Category Growth::
                                                Essential Dairy and Plant-based grew 3.7%, Specialized Nutrition 5.3%, and Waters 4.1%, supported by channel diversification.
Away from Home Growth::
                                                This channel grew high-single digits, driven by premium products in Europe and North America, benefiting from innovations like plant-based yogurt.
Confidence in Strategy::
                                                Despite macroeconomic uncertainties, Danone remains confident in its growth strategy, with strong cash flows and a solid balance sheet for organic growth and acquisitions.

                                

Regional Performance

All regions contributed positively to growth, with standout performances in China, North Asia & Oceania (9.9%) and Latin America (9%). Europe and North America grew at 2% and 3.7%, respectively, while AMEA posted a modest 3.3% increase. The strong momentum in China was attributed to market share gains in Early Life Nutrition and the success of the Essensis innovation.

Category-Wise Growth

Danone's diversified portfolio delivered solid results across all categories. Essential Dairy and Plant-based products grew 3.7%, supported by strong demand for high-protein offerings. Specialized Nutrition outperformed with 5.3% growth, driven by innovation in infant formula and medical nutrition. Waters also contributed with 4.1% growth, though weather-related factors slightly impacted sales.

Strategic Initiatives and Channel Diversification

The company's focus on strategic channels, particularly e-commerce in China, continues to pay off. Away-from-home sales grew high-single digits, benefiting from premium product innovations. Danone is also investing in dedicated sales forces and distribution partnerships to further expand its reach. In Latin America, pricing strategies remain selective, with high-double-digit increases partly due to paused promotions from bad weather, expected to normalize in Q2.

Valuation and Outlook

Danone currently trades at a P/E ratio of 24.55 and an EV/EBITDA of 9.63, reflecting investor confidence in its growth prospects. The company's focus on deleveraging and disciplined capital allocation supports its solid balance sheet, with a free cash flow yield of 5.87%. Management remains optimistic about its ability to navigate macroeconomic uncertainties while maintaining its strategic focus on health and sustainability.

Guidance and Management Confidence

Despite consumer weakness, Danone's strong Q1 performance underscores its ability to deliver volume/mix growth. The company is addressing operational challenges in North America's Coffee Creamers business and remains confident in Europe's improving EDP performance. With a solid cash flow position and a clear strategic roadmap, Danone is well-positioned to maintain its growth momentum in 2025.

3. NewsRoom

Danone - To offset the dilutive impact of its annual employee shareholder plans, Danone launches a buyback of 3.8 million shares

Dec -04

Source:

Horizon Family Brands buys Maple Hill Creamery to grow better-for-you portfolio

Dec -02

Source:

Is Danone (DANOY) Stock Outpacing Its Consumer Staples Peers This Year?

Nov -28

Source:

What Catalysts Are Changing the Story for Danone?

Nov -28

Source:

United States Non-GMO Food Market Report 2025-2033, Profiles of Amy's Kitchen, Blue Diamond Growers, Organic Valley, Hain Celestial, Nestle, Kellogg's, PepsiCo, Pernod Ricard, Clif Bar, Danone

Nov -26

Source:

Yeast Market Competitor Landscape Report 2025: Recent Developments, Company Strategies, Sustainability Benchmarking, Product Launches, Key Persons, and Revenue Forecasts

Nov -24

Source:

Danone to sell probiotic juices brand ProViva to Lactalis

Nov -21

Source:

How Danone optimizes creator-driven ads as investment surges

Nov -20

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Essential Dairy and Plant-Based Products (EDP)

Expected Growth: 4.8%

Driven by increasing demand for healthy and sustainable food options, Danone's essential dairy and plant-based products, such as yogurt and milk, will experience growth, fueled by expanding distribution channels and innovative product offerings.

Specialized Nutrition

Expected Growth: 4.5%

Strong demand for tailored nutritional solutions, driven by increasing consumer awareness of specific life stages and health conditions, such as infant nutrition, allergy management and healthy aging, will fuel Danone's Specialized Nutrition segment growth.

Waters

Expected Growth: 4.5%

Increasing health awareness and demand for natural beverages drive growth in the bottled water segment, led by premium brands like Evian and Volvic

7. Detailed Products

Actimel

A probiotic yogurt drink that supports gut health and immune system

Danone Oikos

A Greek yogurt brand offering high-protein and low-fat yogurt products

Danone Activ

A range of probiotic yogurts and fermented milk products for gut health

Evian

A brand of bottled water sourced from the town of Evian-les-Bains in France

Volvic

A brand of bottled water sourced from the Auvergne region in France

Nutricia

A range of medical nutrition products for patients with specific dietary needs

Karicare

A range of infant formula and baby food products

Aptamil

A range of infant formula and baby food products

8. Danone S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Danone S.A. operates in the food industry, where substitutes are available, but the company's strong brand portfolio and product diversification mitigate the threat.

Bargaining Power Of Customers

Danone S.A. has a large customer base, which reduces the bargaining power of individual customers. Additionally, the company's strong brand reputation and product quality help to maintain customer loyalty.

Bargaining Power Of Suppliers

Danone S.A. relies on a network of suppliers for raw materials, packaging, and logistics. While the company has some bargaining power due to its size, suppliers may still exert some pressure on prices and delivery terms.

Threat Of New Entrants

The food industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and established distribution networks. This limits the threat of new entrants to Danone S.A.'s market share.

Intensity Of Rivalry

The food industry is highly competitive, with many established players competing for market share. Danone S.A. faces intense rivalry from companies like Nestle, Unilever, and General Mills, which can lead to pricing pressures and advertising wars.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	49.10%
Debt Cost	3.95%
Equity Weight	50.90%
Equity Cost	6.09%
WACC	5.04%
Leverage	96.45%

11. Quality Control: Danone S.A. passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Imperial Brands

A-Score: 7.7/10

Value: 5.8

Growth: 5.3

Quality: 6.3

Yield: 9.4

Momentum: 9.5

Volatility: 9.7

1-Year Total Return ->

LDC

A-Score: 6.2/10

Value: 7.4

Growth: 2.2

Quality: 6.7

Yield: 3.8

Momentum: 9.0

Volatility: 8.3

1-Year Total Return ->

Danone

A-Score: 5.8/10

Value: 3.3

Growth: 4.0

Quality: 5.2

Yield: 5.0

Momentum: 7.5

Volatility: 9.7

1-Year Total Return ->

Cranswick

A-Score: 5.5/10

Value: 4.4

Growth: 6.7

Quality: 5.2

Yield: 3.1

Momentum: 4.0

Volatility: 9.7

1-Year Total Return ->

ABF

A-Score: 5.4/10

Value: 6.9

Growth: 6.7

Quality: 5.2

Yield: 3.8

Momentum: 3.0

Volatility: 7.0

1-Year Total Return ->

Nestle

A-Score: 4.9/10

Value: 3.2

Growth: 3.6

Quality: 5.4

Yield: 6.2

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-3.48%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.04%

Danone S.A. - FR0000120644

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BN

1.c. Company Highlights

Less Volatile

Average Growth

Fairly Valued

Earnings Beats

Revenues Miss

Earnings Miss

Revenues Beats

Lower Growth

Strong Momentum

Expensive

Better Quality

Stable Momentum

Average Quality

2. Danone Posts Strong Q1 2025 Earnings with 4.3% Organic Sales Growth

Regional Performance

Category-Wise Growth

Strategic Initiatives and Channel Diversification

Valuation and Outlook

Guidance and Management Confidence

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Essential Dairy and Plant-Based Products (EDP)

Expected Growth: 4.8%

Specialized Nutrition

Expected Growth: 4.5%

Waters

Expected Growth: 4.5%

7. Detailed Products

Actimel

Danone Oikos

Danone Activ

Evian

Volvic

Nutricia

Karicare

Aptamil

8. Danone S.A.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Danone S.A. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

76.18$

Current Price

76.18$

Potential

-0.00%

12.e Scoring ^Insights

12.f DCF ^BETA