WLN (Buy, TP: EUR36, under review) Worldline - weak Q3s and outlook: Stock discounting (heavily) negative FCF growth
Worldline reported revenues which missed by 2.5% but an outlook which implied much larger cuts to EBITDA and FCF. We run through the revised outlook and show what is being implied in the current share price for FCF outlook - a heavily negative scenario: negative 6% terminal growth. Despite the cuts to EFCF, leverage is still set to fall (~1.6x in 2023 to 1.1x in 2024) and the stock looks cheap after today's fall (a clean EqFCF yield of 16%) but we suspect the Board's appetite for a buy back and/or dividend (as we had previously envisaged) is now likely lower.Worldline is a financial transaction processing company based in France. Co's operations are organized along three segments covering payments and digital services: Merchant Services & Terminals (facilitating consumer engagement around end-to-end e-payment transactional services on any device – before, during and after the point of sale); eMobility and eTransactional Services (assists businesses and governments in developing new digital services enabling strategic digital transformation); and Financial Processing & Software Licensing (provides processing services to banks and financial institutions for managing card-based and online cashless payments).
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