Nestlé (NESN)— a core holding in our portfolio — reported a strong quarter, with organic growth of 8.5%, broad-based across most geographies and categories, off sales increase of 9.2%, observes Adrian Day, editor of Global Analyst.

Pricing rose 7.5% reflecting cost inflation. The Switzerland-based company — the world’s largest food and beverage firm — is looking for full-year growth of around 8% with an operating profit expected at around 17%. These numbers are all near the top end of the company’s goals.

Net acquisitions had a positive impact of 1.2% on earnings. The company continued to build the Health Science division, buying two small companies in Brazil and New Zealand.

Acquisitions also included The Bountiful Company and Orgain, two well-known niche brands. Nestlé also announced plans to acquire the Seattle’s Best Coffee brand from Starbucks (SBUX).

As has been the case recently, pet care continued to be the largest contributor to organic growth, particularly the premium brands and veterinary products. It seems people are still prepared to spend increasing amounts on their pets.

Nestlé has a strong balance sheet, reflected in Moody’s Aa3 rating. It has increased revenue (and its dividend) in virtually all of the past 60 years, and never cut the payout over that period. It bought back over Euro 6 billion of stock last year and continues with the program.

With a consistently high return on capital and equity–its return on invested capital is more than twice virtually every peer — it is trading near the low end of its valuations (with a p/e of 18.3, its lowest since 2015), though the yield (at 2.6%) is lower than its historical average. Nestlé remains a core holding, and is a buy at current levels.

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