Sodexo (EPA:SW)

Intro

Sodexo was founded in 1966, starting as a small catering company serving institutions and businesses. Nearly 60 years later, it has grown into one of the world's largest food services and facilities management companies, operating in over 40 countries with around 400,000 employees.

A key feature of Sodexo is its ownership structure. The Bellon family controls approximately 44% of the capital through their holding company Bellon SA, carrying nearly 59% of voting rights. In 2015, the family entered into a 50-year agreement preventing descendants from freely disposing of their shares – a strong signal of long-term commitment.

In early 2024, Sodexo spun off its employee benefits and vouchers business, Pluxee, which is now independently listed. This was a decisive move, transforming Sodexo into a pure-play food and facilities management company. The cross-shareholding with Bellon SA was also unwound the same year, with the proceeds returned to shareholders as a special dividend. In short, the group has been significantly simplified and is now fully focused on its core operations.

Valuation

At a share price of around €44, the market capitalization sits at approximately €6.5 billion. The stock has declined roughly 40% from its highs and is trading near its 52-week low.

For fiscal year 2025 (ending August 2025), Sodexo reported revenues of €24.1 billion, an underlying operating margin of 4.7%, underlying EPS of €5.37, and free cash flow of €459 million. The dividend stands at €2.70, representing a yield of roughly 6% at today's price.

At a P/E of around 8-9x underlying earnings, the stock looks remarkably cheap for a global market leader in an industry with long-term contracts and a high client retention rate. The balance sheet is in reasonable shape, with net debt at 1.8x EBITDA.

What's next?

In November 2025, Sodexo appointed Thierry Delaporte as its new CEO. Delaporte, formerly CEO of Wipro, brings a strong track record in operational transformation and knows the US market well.

Fiscal 2026 is positioned as a transition year, with guided organic revenue growth of just +1.5% to +2.5% and margins expected to be slightly below fiscal 2025. Not exciting in the short term. But the pieces are falling into place: a simplified business, a focused management team, a new CEO with a clear mandate, and a controlling family thinking in decades, not quarters.

If Sodexo can perform over the next few years, the combination of earnings growth and potential multiple re-rating could be very rewarding.

Current Price

€44.32 per share

Disclosure

The author is currently long Sodexo.