Morningstar | Another Blow-Out Quarter but Edenred Shares Remain Overvalued
Wide-moat Edenred posted a solid first-half result, with organic revenue growth of close to 15% and an EBIT improvement of similar magnitude year over year. These numbers were in line with our and market expectations, hence we do not expect to make any material changes to our full-year forecasts, nor to our EUR 31 fair value estimate. Despite the outstanding performance of the stock over the last few years, we believe expectations are now sufficiently high to render the shares overvalued at the prevailing price.Geographically and divisionally there were no weak spots, with mid-teen growth rates achieved across the board. Emerging markets, which represent almost half of group revenues, saw a blow-out performance however, with Latin America (excluding Brazil) and the rest-of-the-world segments both delivering organic revenue growth of more than 20% over the period. This was, for the most part, driven by the company’s fleet and mobility solutions, and incentive and rewards programs, which we believe continue to offer huge headroom for growth.
Employee benefits, and particularly the food-voucher business, remains a highly consolidated market in which Edenred is the leader worldwide. We believe the company’s continued expansion both in existing and new markets will continue to entrench their position, underpinning the company’s wide-moat rating.
Edenred designs and delivers services to clients, companies or public sectors, enabling them to offer beneficiaries additional purpose-directed purchasing power, such as the Ticket Restaurant® meal voucher, and provides prepaid corporate services. Co.'s product offering ensures that allocated funds are used as intended, allowing its clients to manage: Employee benefits (Ticket Restaurant®, Ticket Alimentacion®, Ticket CESU, Childcare Vouchers®, etc.); Expense management process (Ticket Car®, Ticket Clean way®, Repom®, etc.); and Incentive and rewards programs (Ticket Compliments®, Ticket Kadeos®, etc.). Co. also supports public institutions in managing their social benefits programs.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.