Danone's financial analysis

Extract

[...] CAPM MODEL Rm = Rf = 0,19% https://www.aft.gouv.fr/index.php/en/today-tec-10-index as of June, 4th 2019. Beta = 0,61 (cf risk) Re = Rf + beta (Rm – Rf) Re = 0,19% + 0,61 x - = 4,34% With the CAPM Model, we find a cost of equity of which is higher (so more expensive) than the result found with the DDM Model. The market risk premium describes the relationship between returns from treasury bonds (Rf – risk free rate) and a stock market portfolio (Rm– the expected return on the market). [...]

[...] For example years ago, Danone was worth € 39,82 Million. Source: https://www.euronext.com/fr/products/equities/FR0000120644-XPAR/quotes • EBITDA = € 4,342 Million Danone's EBITDA is about €4,3 million, and about 17,6% of its revenues. This ratio is high and means that the company realises high operating performance, without having to factor tax and depreciation Source: https://www.danone.com/content/dam/danone-corp/investors/fr-all-publications/2018/registrationdocuments/Danone%20-%20Document%20de%20Reference%202018.pdf • Operating margin = € 2,741 Million Danone's operating margin is about €2,7 million, and about 11,2% of its revenues. This ratio is also high and means that the company can realise 0,11€ of profit for each euro of sales after paying variable costs of production. [...]

[...] Comparing to its competitors, Danone seems to have the highest market capitalisation and one of the lowest WACC. This means that the stock market globally finds Danone's stock less risky and more interesting to make profits. Investors trusts Danone in its growth strategy and future, which is why the market capitalisation is high and the WACC low. ROIC & EVA ROIC = 7,51% (source morningstar) Source: http://financials.morningstar.com/ratios/r.html?t=XPAR:BN ROIC = EBIT x – / Invested capital = x – / = 6,44% Source: https://www.danone.com/content/dam/danone-corp/investors/fr-all-publications/2018/registrationdocuments/Danone%20-%20Document%20de%20Reference%2020 18.pdf (p59) EVA = ROIC – WACC = 6,44% - 2,98% = 3,46% With our calculation, we find a ROIC (return on invested capital of which represents the residual value of assets compared to liabilities. [...]

[...] Then, we can say that due to its high performance indicators, the company takes advantage of a low cost of capital, since the company is not risky. COMPETITIVE COMPARISON COMPETITIVE COMPARISON Source: https://www.gurufocus.com/term/wacc/OTCPK:GPDNF/WACC-/Danone-SA With our analysis, we found 2,98% for Danone's WACC and a market capitalisation of €49,424 million ($55,970 million). According to Gurufocus, Danone's WACC in December 2018 is 3,06%. So our estimation is close to professional's estimation. For the market capitalisation, Gurufocus retains $ million euros, but we should highlight that market capitalisation is moving very fast, and change rates too. [...]

[...] This means that after paying all production costs (fixed such as interests and taxes & variable), the company makes profit. This profit will serve to pay back investors with dividends and make other investments to improve their offers. Source: https://www.danone.com/content/dam/danone-corp/investors/fr-all-publications/2018/registrationdocuments/Danone%20-%20Document%20de%20Reference%202018.pdf • ROA = This ratio means that for each euro invested in assets, the company makes 0,05€ of profits. This represents the profitability of assets. Source: https://fr.finance.yahoo.com/quote/BN.PA/key-statistics?p=BN.PA • ROE = 15,73% This ratio means that for each euro invested in equity (capital), the company makes 0,15€ of profits. This represents the profitability of equity (stock's funds and profits). [...]