Sodexo

Sodexo reported Q3 25 (ending in May 2025) revenue marginally better than expectations at €6.12bn, with organic growth of +3.0%. The period saw a negative FX impact of -2.1%, largely due to the depreciation of the USD and several Latin American currencies. 

However, the group has now revised its FY25 guidance, anticipating both organic growth (now 3-4%) and underlying operating margin (up 10-20bp) to land towards the lower end of their respective ranges. 

We will marginally adjust our estimates lower. We see little read across for Compass regarding overall business trends in North America.

Following the profit warning in March, this downgrade looks more like a fine-tunning than anything else. However, our expert is a bit surprised, usually when you do a profit warning in March, you shouldn't need to adjust your guidance downwards in June. This demonstrates that there is no improvement in the underlying trends in the US and that the top management wasn't careful enough.

Indeed, we will adjust our earnings downwards but even so, the current valuation is now attractive.  Stock trades on a PE25 (Aug) and 26 of 11x and 9.9x and yields 5% in dividends. While he still has concerns about the top management (Sophie Bellon is both Chairman of the Board and CEO and could benefit from additional support on strategy and day-to-day management), valuation now looks cheap. He would consider building a line now for the long run if stock is down today.