Nestle is projected to perform in line with the overall market over the next 6-12 months based on an analysis of valuation, revenue growth, and return on equity. While revenues have decreased slightly and growth has been absent, equity has increased 12% through effective capital management. The stock is currently fairly priced based on historical valuation ranges.

1. Reiterated: March 9, 2016
We project Nestle will perform in line with the overall market over the next 6 to 12 months. This
projection is based on our analysis of three key factors that influence common stock performance:
current valuation level, revenue growth, and return on equity.
52 Week Price Range
CHF 64.80 – CHF 76.60
Market Capitalization
CHF 213.87 Billions
Annual Dividend
Yield 3.3%
Annual Dividend
Rate CHF 2.30
Industry
Drugs
Revenues decreased from CHF 92.1 Billion to CHF 91.6 Billion for a
decrease of 0.5% year over year. In 2010 Revenues were CHF 93
Billion and unless this level is surpassed again sustained growth is
absent. As revenue growth ultimately drives both PE ratios and
Return on Equity higher, both drivers for stock price appreciation,
we cannot expect shares to break above its 52-week Price Range.
Equity increased from CHF 62.5 Billion CHF 70.1 Billion for a
growth rate of 12% suggesting effective capital management,
especially in absence of revenue growth. As increase in equity
drives share price, this rate is neutral to positive.
Based on past five-year P/CF high/low of 11 and 17 and cash-flow
of CHF 4.60 we forecast a trading range for the shares of between
CHF 51 and CHF 78; therefore, with a current price of CHF 71.35 the
shares are fairly priced to slightly over-valued.
Based on historical high/low price book value ratios of 3.55/2.55
multiplied by the latest book value of 22.10 we get a projected range
of 56-78.
Report Date: March 9, 2016 Price as of March 8, 2016

2. 2
that owns a vas line-up of well-known brands with the most recognizable being: Carnation, Coffee-Mate, Dreyer’s, Friskies,
Gerber, Gourmet, HäagenDazs, KitKat, Maggi, Mövenpick, Nescafe, Perrier, Purina, S. Pellegrino, Smarties, Thomy.
Cash-Flow Valuation Bands
Valuation bands are based on the highest and lowest
Price/CF ratio in the past five years applied to the trailing
12-month cash-flow. Price (CHF)
0
20
40
60
80
100
2011 2012 2013 2014 2015
Lower Band Upper Band
Report Date: March 9, 2016 Price as of March 8, 2016

3. 3
Book Value Valuation Bands
Valuation Bands are based on highest and lowest
price/book value ratios based on trailing 12 month book-
value
2010 2011 2012 2013 2014
REVENUE GROWTH -14% -10% 7% 3% -1%
CASH 4.00 3.20 4.90 4.70 4.60
RETURN ON EQUITY 26% -8% 7% 3% 12%
BOOK VALUE 18.40 17.80 19.10 19.60 22.10
DIVIDEND PAID 1.85 1.95 2.05 2.15 2.20
DIVIDEND YIELD 3.3% 3.6% 3.4% 3.3% 3.0%
0
20
40
60
80
100
2011 2012 2013 2014 2015 2016
Lower Band Upper Band

4. 4
Meier's Hold recommendation on Nestle is the result of our systematic analysis on four basic characteristics: revenue
strength, relative valuation, book value, and return on equity. The company has generated a negative trend in revenue
growth over the past 5 years and hasn’t surpassed the level reached in 2009. However, while the company hasn’t reached its
downwards revised forecast several times, Nestle has improved its return on equity and increased its dividends
continuously. Based on its current valuation, the company is neutrally priced and doesn’t offer opportunistic capital
appreciation potential over the next 12 months. Due to the maturity and size of the company we focus on book value price
bands. The company has a constant and predictable price velocity around BV and should only be aggressively bought if they
fall below 56 CHF. The shares demonstrate low volatility and have a yield over 3% and could be interesting for fixed income
investors,
Revenue Strength is Negative
Return on Equity is a key fundamental measure for the
health of a business. For blue chip companies with high
value brands this measure should be above 15% year after
year. And although over the last period a positive rate of
12% was reached, the recent history was disappointing with
negative to single digits ROE. The decline since the 26%
recorded in 2010, demonstrates weakness. We assign a
neutral rating in this respect only due to the last period
return to double digit ROE.
Return on Equity is Neutral
Return on Equity is a key fundamental measure for the
health of a business. For blue chip companies with high
value brands this measure should be above 15% year after
year. And although over the last period a positive rate of
12% was reached, the recent history was disappointing with
negative to single digits ROE. The decline since the 26%
recorded in 2010, demonstrates weakness. We assign a
neutral rating in this respect only due to the last period
return to double digit ROE.
Cash-flow Strength is Negative
Cash-Flow has not had much growth in the last 5 years and
has decreased in the last period. The loss of cash-flow
generating power and lack of ability to overcome 2012 levels
show weakness. And although 2012 was promising with
positive cash-flow growth, 2013 was negative again. This
persistent weakness combined with the recent down-turn is
an indication of weakness that could lead to poor stock
performance.
Historical research shows that cash-flow strength is an
important factor driving stock price appreciation. Meier
measures cash-flow growth, and momentum changes to get
an early indication of changing cash-flow patterns.
Meier does its valuation work not based on future estimates,
which are pure guesswork, but on factual historical data,
analyzed to project future potential.
Book-Value strength is Positive
Mature companies can be accurately valued based on price
book value historical velocity. And a growing book value is
a good indicator that shares will appreciate in line with it.
Prices have shown a narrow trading range around book
value with high/low factors of 2.55 and 3.55 over the last five
years. So the increase over the last period of 13% is a positive
indicator that share-prices will appreciate in line with book
value growth momentum, all else being equal.
Report Date: March 9, 2016 Price as of March 8, 2016

5. 5
Report Date: March 9, 2016 Price as of March 8, 2016
Meier Stock Ratings: Meier covers stocks traded on
the Swiss Exchange using a proprietary quantitative model
that evaluates a company’s revenue and cash-flow strength,
its relative valuation, such as price/cash-flow historical
velocity, and price book-value historical velocity. Meier’s five
recommendation ratings include strong buy, buy, hold, sell,
strong sell. For all stocks in our coverage universe, ratings
are generated each quarter and reflect the fundamental and
price data as of the last trading day of the quarter.
Quality Rating: Quality Rating is based on factors that
indicate a company’s overall financial strength and earnings
predictability. Each company in the Meier database is
assigned a quality rating ranging from A+ to C- based on
size, debt level, earnings history and industry stability. High
quality stocks tend to have higher average market
capitalizations and annual sales, as well as lower average
levels of debt as a percent of equity and lower earnings
variability. High quality stocks also tend to have lower
standard deviations of annual returns. Accordingly, a firm’s
quality rating may be used to gauge the risk associated with
a particular stock. The Quality Rating letter grades are
translated into the following categories: A- and higher are
High Quality; B and B+ are Good Quality; B- is Average
Quality; C+ is Low Quality; C and lower are Very Poor
Quality.
Valuation Bands: The Ford Valuation Bands charts
shows the price performance of the stock over the past 5 year
period in relation to its historical price/cash-flow, and the
price/book-value valuation range. The red and green lines
indicate the highest and lowest P/CF&P/BV, respectively, in
the past 5 years multiplied by trailing 12-month cash-
flow/book-value per share at the plotted point. The end
point prices shows the current share price (in black) along
with the potential high price based on the highest realized
P/E & P/BVin the past 5 years (in red), potential low price
based on lowest realized P/E & P/BV in the past 5 years (in
green).
Disclaimer The reports and the ratings contained herein were prepared by Meier Equity Research solely for the use of its clients
and authorized subscribers. Reproduction or distribution of such reports or ratings in any form is prohibited without the
express prior written permission of Meier Equity Research. The reports and ratings are based on publicly available information
believed to be reliable. Meier Equity Research endeavors to present the timeliest and most accurate data possible, but accuracy
in not guaranteed. Additional information, such as corporate actions, industry and economic factors, and other events and
circumstances that may affect a stock’s price may not be reflected in the Meier Equity Research rating or in the data presented.
This report is for information purposes only and should not be construed as an offer to buy or sell any security.
Recommendations made in this report may not be suitable for all investors. Recommendations do not take into account the
individual user’s investment risk or return objectives or constraints. Meier is not responsible for the results of actions taken
based on the information presented. Opinions expressed herein are subject to change without notice. The research process used
is derived solely from a quantitative approach that uses historical data to produce a stock ranking system. Each covered stock is
assigned one of five ratings based on relative scores, Strong Buy, Buy, Hold,