1. Share Price, Market Structure & the Trump Tariff Circus
Current price: CHF 72.51
Down from CHF 105 like it just committed a felony.
And why?
Not because Nestlé suddenly forgot how to sell food to 8 billion humans.
Not because KitKat demand collapsed.
Not because Nespresso machines stopped working.
It’s because markets are acting like terrified children every time Trump opens his mouth and threatens tariffs like he’s playing Call of Duty with the global economy.
It’s honestly insane.
Europe is getting smoked because U.S. policy noise is being priced like permanent structural damage instead of what it actually is: political bullshit that changes every 72 hours.
Technically:
- Clear downtrend from CHF 105
- Lower highs, lower lows
- Late-stage bearish structure
- Prior support at CHF 78–82 now resistance
- Momentum still negative but slowing
- Stock is oversold and compressing near support
Support levels:
- CHF 72.50–73.30 (right here, right now)
- CHF 69.62
- CHF 67.27
- CHF 61.60 (real apocalypse level)
Resistance:
- CHF 78–82
- CHF 91–96
- CHF 105+
So yeah — could it go lower if Trump drops another tariff tweet at 3am?
Absolutely.
But from a risk-reward standpoint, this is exactly how you end up buying high-quality global monopolies at stupid prices.
2. Financial Reality Check — This Business Is a Monster
Let’s get something straight.
Nestlé does ~CHF 95–100 BILLION in annual revenue.
That’s not a typo.
That’s more revenue than most “growth darlings” will ever sniff in their entire corporate lives — and Nestlé does it while running one of the most complex supply chains on Earth.
Coffee.
Cocoa.
Grains.
Dairy.
Water.
Pet food.
Infant nutrition.
Frozen food.
Medical nutrition.
All of it sourced globally.
All of it transported globally.
All of it priced locally.
All of it sensitive to FX, tariffs, weather, geopolitics, and commodity lunacy.
And despite all that…Margins are still very respectable:
- Gross margin: ~48–49%
- Operating margin: ~15–17%
- EBITDA margin: ~20–22%
- Net margin: ~10–12%
That’s insanely good for a consumer staples logistics monster. If a tech company had those margins with that scale, people would be calling it “defensive growth”.
3. Earnings & Why They Look Worse Than Reality
Net income: ~CHF 10–11B
EPS: flat to slightly down
They got hit by a perfect storm of:
- Tariffs on agricultural inputs
- Coffee, cocoa, sugar, and grain inflation
- FX translation losses
- Logistics cost spikes
- Labor cost inflation
- Energy costs
- Hedging costs
- Supply chain friction
- Political nonsense
Basically:
every macro variable decided to punch Nestlé in the face at the same time.
This isn’t a broken business.
This is a temporarily distorted earnings base.
4. Returns & Efficiency — Still Strong, Just Compressed
Even with all that bullshit:
- ROE: ~25–30%
- ROA: ~8–10%
- ROCE: ~13–15%
That’s elite for a consumer staple.
Returns only rolled over because tariffs and costs blew out the denominator.
Once tariffs are gone and costs normalize?
ROCE goes back into the high teens.
That alone justifies a materially higher stock price.
5. Valuation — This Is the Entire Point
Right now Nestlé trades at:
- P/E: ~18–20x
- Forward P/E: ~16–18x
- EV/EBITDA: ~12–14x
- Dividend yield: ~4%
That looks “fair” if you assume margins stay permanently fucked.
But that assumption is wrong.
Those multiples are being applied to earnings that are artificially depressed by tariffs and macro noise.
On normalized earnings, this thing is cheap.
6. Balance Sheet & Dividend — Zero Stress Here
This is not some fragile over-levered mess.
- Interest coverage: >10x
- Operating cash flow margin: ~16–18%
- Free cash flow margin: ~10–13%
- Dividend yield: ~4%
- Payout ratio: ~65–75%
- Dividend fully covered by free cash flow
They literally pay you ~4% a year while you wait for the market to stop being stupid.
7. The Entire Thesis: Tariffs Are the Distortion
This is it.
This is the whole trade.
If tariffs are ruled illegal, removed, or politically reversed:
One-Time Effects
- Refund of historical tariff payments
- One-off cash windfall
- EPS spike
- Balance sheet strengthens
- Buybacks resume
- Special dividend possible
Ongoing Structural Effects
- Lower agricultural input costs
- Lower packaging and logistics costs
- Less FX drag
- Less hedging cost
- Lower shelf prices → better volumes
- Margin recovery
Impact on margins:
- Gross margin: +150–300 bps
- Operating margin: +100–250 bps
- EBITDA margin: +150–300 bps
Impact on earnings:
- EPS: +12–25% steady-state
- ROCE back into high teens
- Free cash flow materially higher
8. Price Outlook Without Tariff Idiocy
Base case:
- CHF 82–90 in 6–12 months
- CHF 90–96 in 12–18 months
Bull case:
- CHF 105+ in 18–36 months
- Full retracement of tariff-era drawdown
Bear case:
- CHF 61–67 only if:
- Severe global recession
- Demand actually collapses
- Management screws up margin recovery
9. What This Actually Is
This is not a dying company.
This is a world-class cash machine being temporarily repriced because:
- Trump treats tariffs like a slot machine
- Markets panic every time he tweets
- Macro tourists dump anything European
- Algorithms can’t tell politics from fundamentals
Which is exactly how long-term money gets made.
Final Take
Nestlé is a high-quality global monopoly trading at a distorted price because of tariff theater and macro fear.
Nothing structurally wrong with the business.
Margins are compressed, not broken.
Cash flow is intact.
Dividends are safe.
Returns are still elite.
At CHF ~72.50, you are buying:
- ~4% yield
- A global staple monopoly
- Artificially depressed earnings
- Massive operating leverage to tariff normalization
Fair value without tariffs: CHF 90–105.
That’s +25% to +45% upside with dividends on top.
This is exactly the kind of bullshit-driven mispricing that creates long-term compounders.
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