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Nestlé S.A. (NESN) is a publicly traded packaged foods business based in Switzerland which employs around 270,000 staff. Nestlé is listed on the SW and traded in Swiss Franc. Its current price of CHF73.98 is 11.9% down on its price a month ago (CHF84.00).
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Read the full methodologyAll investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Buying shares in just one company is generally considered a riskier bet than investing in a range of investments - AKA a "diversified portfolio". Experts generally recommend holding a mix of investments in specific assets and funds. Funds are ready-made portfolios of multiple companies' shares (potentially including Nestlé), and the idea is that drops in the value of one constituent company's share price might be offset by rises in others.
Nestlé is a major part of the SW, so it's included in many global funds and investment trusts, as well as tracker-style exchange traded funds (ETFs).
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
Valuing a stock is incredibly difficult, and any metric has to be viewed as part of a bigger picture of overall performance. However, analysts commonly use some key metrics to help gauge value. Check out the Nestlé P/E ratio, PEG ratio and EBITDA.
Nestlé's current share price divided by its per-share earnings (EPS) over a 12-month period gives a "trailing price/earnings ratio" of roughly 20x. In other words, Nestlé's shares trade at around 20x recent earnings.
However, Nestlé's P/E ratio is best considered in relation to those of others within the industry or those of similar companies.
Nestlé's "price/earnings-to-growth ratio" can be calculated by dividing its P/E ratio by its growth – to give 2.4002. A PEG ratio over 1 can be interpreted as meaning shares are overvalued at the current rate of growth, or may anticipate an acceleration in growth.
The PEG ratio provides a broader view than just the P/E ratio, as it gives more insight into Nestlé's future profitability. By accounting for growth, it could also help you if you're comparing the share prices of multiple high-growth companies.
However, it's sensible to consider Nestlé's PEG ratio in relation to those of similar companies.
Nestlé's EBITDA (earnings before interest, taxes, depreciation and amortisation) is a whopping CHF18.2 billion (£16.2 billion).
The EBITDA is a measure of Nestlé's overall financial performance and is widely used to measure a its profitability.
To put that into context you can compare it against similar companies.
All investing should be regarded as longer term. The value of your investments can go up and down, and you may get back less than you invest. Past performance is no guarantee of future results. If you’re not sure which investments are right for you, please seek out a financial adviser. Capital at risk.
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