Narrow-Moat Sodexo Hits the High Notes in Fourth Quarter

Narrow-moat Sodexo’s full-year results were exactly what the doctor ordered. A sequential improvement in organic revenue growth and operating margin recovery occurred over the year, with the group reaching 87% of fiscal 2019 activity by the fourth quarter of this fiscal year. With many investors believing that activity levels were permanently impaired following the coronavirus pandemic, these results send a clear message that Sodexo is on the right track once again. Management is guiding between 15% and 18% organic revenue growth in 2022, in line with our existing estimates, and operating margins of close to 5%, 50 basis points below prepandemic levels. We reiterate our EUR 90 fair value estimate and still see marginal upside, despite the rally on Oct. 27.