# Danone (DANOY)

Sector: Packaged food & beverages

| Field | Value |
|---|---|
| Price | $13.77 |
| Fair value (Analysts) | $16.50 |
| Discount to fair value | 16.5% |
| Fair value uncertainty (Analysts) | Low |
| Economic moat (Analysts) | Narrow |
| LSEG analyst rating (1 strong buy to 5 strong sell) | 2 |
| Data as of | 2026-10-16 |
| Next earnings | 2026-10-28 (confirmed) |

## In short

The market prices Danone for slow growth in Europe, the 2026 infant formula recall and weak North American dairy, and a return to growth in these areas through 2027 can close the gap.

## Themes and gap

- Themes: Weak consumer (weak-consumer), Regulation and courts (regulation-legal)
- Gap type: Can close (closable)
- Why: The Q3 2026 sales on October 28, 2026 and the 2026 results in early 2027 show whether infant formula in Europe recovers and North American dairy improves.

## About

Danone is a food and beverage company based in Paris. It has three categories: Essential Dairy and Plant-based (EDP), such as Activia, Alpro, Oikos and Silk, Specialized Nutrition, such as Aptamil infant formula and Nutricia medical nutrition, and Waters, such as evian, Volvic, Aqua and Mizone. Since January 2026, it reports three regions: EMEA, the Americas and APAC. Sales were € 27.3 billion in 2025, with a recurring operating margin of 13.4%. In 2026, Danone bought Huel, a maker of complete meal products, and agreed to buy MADE Group in Australia. Danone shares trade in Paris. DANOY is an American Depositary Receipt that trades over the counter in the United States.

## Thesis

The market prices Danone for slow growth in Europe and for problems in two businesses. In Q2 2026, sales in Europe grew only 0.6% like-for-like. Since January 2026, Danone has recalled batches of infant formula in some markets after national food safety authorities changed their requirements, and the company says that trust in the category in Europe must still be rebuilt. Danone also says that parts of its dairy portfolio in North America are not competitive enough. Free cash flow fell 27% to € 852 million in the first half of 2026, and net debt rose to € 9.0 billion after the dividend. The purchases of Huel and MADE Group add integration risk. For the gap to close, three things must be true. Like-for-like sales must grow 3% to 5% in 2026, with recurring operating income growing faster than sales, as the company guides. Infant formula in Europe must return to growth as the market normalizes, as management expects. North American dairy must keep improving. The Q3 2026 sales on October 28, 2026 give the first test. The full-year 2026 results in early 2027 are the main test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is weak consumer demand in Europe, together with higher input costs that Danone cannot fully pass on in prices.

## Checkpoints

- Oct 28, 2026: Q3 2026 sales: Europe and infant formula. Status: Pending. Watch: Like-for-like sales growth inside the 3% to 5% range and a recovery in infant formula in Europe pass; growth below 3% or a further fall in infant formula fails.
- Feb 2027 (estimate): Full-year 2026 results and 2027 guidance. Status: Pending. Watch: 2026 like-for-like growth of 3% to 5% with recurring operating income growing faster than sales, and free cash flow near the € 2.8 billion of 2025, pass; a miss on the guidance or lower free cash flow fails.

## Balance sheet

- Cash: €8.3B
- Debt: €17.4B
- Net debt: €9.0B
- EBITDA, last 12 months: €4.3B
- Net debt / EBITDA: 2.1× (medium)

Danone funds its operations with bonds, bank debt and commercial paper, and it holds large cash and short-term investments. At June 30, 2026, financial debt was € 17.4 billion, including bank overdrafts of € 1.1 billion and about € 0.4 billion of liabilities for put options of minority shareholders. Cash and short-term investments were € 8.3 billion. Net debt was € 9.0 billion, up from € 8.4 billion at December 31, 2025, mainly because of the dividend of € 2.25 per share paid in May 2026. EBITDA is Danone's EBITDA for 2025, as it defines it for its net debt to EBITDA ratio, which was 2.0 times at December 31, 2025. The cost of net financial debt was € 104 million in the first half of 2026. The purchase of Huel in September 2026 and the pending purchase of MADE Group will add to net debt in the second half.

As of 2026-06-30.

Sources:

- https://www.danone.com/content/dam/corp/global/danonecom/investors/en-all-publications/2026/pressreleases/prdanone290726.pdf
- https://www.danone.com/content/dam/corp/global/danonecom/investors/en-all-publications/2026/pressreleases/danonepr200226.pdf
- https://www.danone.com/content/dam/corp/global/danonecom/investors/aide-memoire/2026/danoneQ32026aidememoire.pdf

## Recent events

- 2026-09-04: Danone completed the purchase of Huel, a maker of complete, nutritionally balanced meal products. Huel is in Danone's accounts from September 1, 2026.
- 2026-08-01: Danone and Arcor completed their joint venture in Argentina. Danone owns 50%, and the business is now an equity-accounted company in Danone's accounts.
- 2026-07-29: Danone reported first-half 2026 results. Sales were € 13.9 billion, up 3.5% like-for-like, with Q2 up 4.2%. The recurring operating margin rose 0.12 percentage points to 13.3%, and recurring EPS rose 0.9% to € 1.92. Free cash flow fell to € 852 million. Danone confirmed its 2026 guidance.
- 2026-06-22: Danone agreed to buy MADE Group, a health-focused food company in Australia, and the remaining 49% of its fresh dairy joint venture with Saputo Dairy Australia. Both deals are expected to close in the second half of 2026.
- 2026-01-23: Danone announced a targeted recall of specific infant formula batches, as national food safety authorities changed their guidance. In February 2026, Danone said that the financial impacts identified were not material.

## Risks

- Medium: The infant formula recall in 2026 hurt sales in Europe and the Middle East. Danone says that trust in the category in Europe must still be rebuilt, and a slow recovery can keep Specialized Nutrition growth low.
- Medium: Danone says that parts of its dairy portfolio in North America are not competitive enough. Q2 2026 like-for-like sales in North America grew 2.6%, mostly from price.
- Medium: Inflation in raw materials and logistics put pressure on margins in the first half of 2026. Danone is raising prices in many markets, which can reduce volumes if consumers buy less.
- Low: Most sales are outside the euro area. Currencies reduced reported sales by 3.3% in the first half of 2026, and changes in the euro to dollar rate also move the ADR price.

## Links

- Page: https://picks.kamadorueda.com/company/DANOY/
- History of changes: https://picks.kamadorueda.com/company/DANOY/history/
- JSON with full history: https://picks.kamadorueda.com/data/company/DANOY.json

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