No. of Recommendations: 10
Nestle in the FT today:
Google: Google SearchWell, I suppose the optimist would note that that's the sort of article you might see at the bottom of the cycle. Assuming you're one who believes that the storm will in fact pass at some point.
Of course, the other thing that you tend to see at the bottom of a problem cycle is a firm that's dirt cheap. Earnings have been flat for a while but are not actually depressed at the moment, and the current price is about 18 times that number, which doesn't count as dirt cheap for slightly damaged goods. At 72 francs it doesn't particularly tempt me, but (say) under 50 it might: you wouldn't have to assume any business improvement to do acceptably well.
The dividend has been rising but the earnings haven't, a trend that can not go on forever. The payout ratio is 78% now. There may be a dividend cut if they reach the point that something actually has to be done. That might trigger a sell-off, as they might need to build a different shape of shareholder base. For the patient, that might be a good long term entry.
Jim
