Sodexo: Cheap Valuation Despite A FY26 Margin Reset

2025-12-30 07:14:27 ET

In October 2025, we initiated Sodexo S.A. ( SDXOF ) ( SDXAY ) with a buy recommendation. As a reminder, the company operates worldwide in contract catering, facilities management, and benefits and rewards. Our buy rating was supported by 1) deeper penetration in still underserved markets, 2) a solid shareholders' basis, 3) selective and value-accretive M&A, and 4) an increasingly regional operating setup designed to match local market dynamics (and taste). Moreover, despite being in a sector with a structurally low-margin model, the company has inflation-indexed pricing and contractual pass-through mechanisms. This provided support for profitability. With a valuation discount versus peers, our analysis was completed....

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