Company Reports

Edenred is the world leader in prepaid corporate services, with its main business in employee benefits, such as meal vouchers. This market is highly concentrated: In key region Brazil, for example, Edenred is the number-one player, followed closely by peers Sodexo and Alelo. Together, the three control 90% of the market. Edenred has a presence in over 40 countries and holds the number-one or number-two spot in each of its key markets.

Wide-moat Edenred's shares fell in early trading as a second poor quarter in a row from the complementary solutions segment exacerbated the negative momentum of the stock. We find the July 23 drop in the stock price to be extreme and maintain our EUR 76 fair value estimate, making the stock attractive in our eyes. Operating organic revenue growth was north of 15% in the first half of the year, driven by the benefits and engagement and mobility businesses. Management nailed down a full-year EBITDA target of EUR 1.265 billion, an increase in the growth rate from prior guidance to 15% from 12%.

Wide-moat Edenred produced a strong start to 2024, despite investors’ concerns over the last few months that have sent the share price tumbling. Organic revenue growth was north of 20% in the first quarter, which, even stripping for interest income, came to almost 17%—a solid result. Management is sticking with its previous full-year guidance, and we maintain our EUR 76 fair value estimate. We see the shares as attractive from here.

Edenred closed out 2023 in a strong position. Organic revenue growth was north of 23% year over year, with EBITDA up more than 30%, reflecting strong margin growth. Full-year guidance points to another strong 2024 with EBITDA growth of more than 12%. Despite the recent fall in the share price on the back of legal concerns in Italy, we reiterate our EUR 76 fair value estimate and see the shares as attractive.

Ahead of its full-year results next week, wide-moat Edenred announced on Feb. 21 that it is being investigated by the Italian authorities in relation to a public tender in 2019. Although information beyond this is scant, it hasn’t stopped the market from hitting the shares hard on Feb. 21, with the share price down 13% at the time of writing. We maintain our EUR 76 fair value estimate for the stock.

Edenred is the world leader in prepaid corporate services, with its main business in employee benefits, such as meal vouchers. This market is highly concentrated: In key region Brazil, for example, Edenred is the number-one player, followed closely by peers Sodexo and Alelo. Together, the three control 90% of the market. Edenred has a presence in over 40 countries and holds the number-one or number-two spot in each of its key markets.

The momentum behind wide-moat Edenred's revenue growth showed no sign of letting up in the third quarter, with like-for-like revenue up almost 24% year over year. Operating revenue growth got a welcome boost from higher interest rates, which generate higher returns on cash on deposit. With the 9-month performance tracking guidance, management made no change to their full-year EBITDA target of EUR 1.055 billion at the midpoint, which represents 26% growth on 2022. With the shares having fallen recently, largely on French antitrust concerns, we see attractive upside to our EUR 69 fair value estimate.

Strong revenue growth continued over from the first quarter into the second for wide-moat-rated Edenred, posting an organic number for the first half of almost 26%. Operating revenue growth got a welcome boost from higher interest rates, which generates higher returns on cash on deposit. Management have nailed down a full-year EBITDA target of EUR 1.055 billion at the midpoint, which represents 26% growth on 2022. With the shares still tracking moderately below out EUR 69 fair value estimate, we still see upside potential here.

Edenred is the world leader in prepaid corporate services, with its main business in employee benefits, such as meal vouchers. This market is highly concentrated: In key region Brazil, for example, Edenred is the number-one player, followed closely by peers Sodexo and Alelo. Together, the three control 90% of the market. Edenred has a presence in 46 countries and holds the number-one or number-two spot in each of its key markets.

Edenred is the world leader in prepaid corporate services, with its main business in employee benefits, such as meal vouchers. This market is highly concentrated: In key region Brazil, for example, Edenred is the number-one player, followed closely by peers Sodexo and Alelo. Together, the three control 90% of the market. Edenred has a presence in 46 countries and holds the number-one or number-two spot in each of its key markets.

With Edenred's organic revenue growth of almost 26%, one could be forgiven for assuming that comparative sales numbers this time last year were weak. However, this was not the case, with growth in the first quarter of the year simply a reflection of the momentum behind the business currently. We reiterate our EUR 50 fair value estimate. However, given the rally in the share price over the last month we view the shares as fairly valued.

Wide-moat Edenred signed off 2022 on a strong note, with EBITDA coming in at the top end of the recently upgraded guided range. However, even more exciting was the momentum prevalent in the business, with growth picking up further in the last quarter of the year. Although we will be updating our forecasts on the back of these results, we don’t expect that any upgrade to our EUR 50 fair value estimate will be material enough to change our view on the stock. At prevailing levels we believe the shares are fairly valued.

Wide-moat Edenred can certainly be labelled one of the few winners of 2022, with many companies globally succumbing to the pressures of inflation and rising interest rates. The firm reported organic revenue growth of close to 20% and upgraded its full-year earnings expectations to the tune of 4%. Although we will adjust our numbers on the back of this strong update, we do not expect this to have a major impact on our EUR 50 fair value estimate. Following the recent rally, we believe the shares are now up with events.

The first half of year has been kind to wide-moat Edenred, with revenue up 18% on a like-for-like basis, and EBITDA running ahead of this, indicative of the operating leverage within the business. Inflation has once again been a boost here, but to what level of inflation this relationship can hold up remains to be seen. We do not expect to make any immediate changes to our forecasts on the back of this update and reiterate our EUR 50 fair value estimate. We view the shares as moderately attractive at these levels.

Wide-moat Edenred’s strong finish to 2021 continued into this year, with organic revenue up more than 15% in the first quarter. While management simply reaffirmed its guidance for operating revenue growth of “more than 8%” for the full year, we forecast revenue growth closer to midteen levels for 2022 as the catch-up effect from the pandemic feeds through. We reiterate our EUR 50 fair value estimate. Given the rally in the share price over the last month we view the shares as currently fairly valued.

Edenred is the world leader in prepaid corporate services, with its main business in employee benefits, such as meal vouchers. This market is highly concentrated: In key region Brazil, for example, Edenred is the number-one player, followed closely by peers Sodexo and Alelo. Together, the three control 90% of the market. Edenred has a presence in 46 countries and holds the number-one or number-two spot in each of its key markets.

Wide-moat Edenred finished 2021 strongly, posting organic revenue growth of 14%. This brings it almost exactly back to precoronavirus levels on the top and bottom line. This tees them up nicely for 2022, with Edenred’s model benefiting from economic trends such as high inflation and lower unemployment. We do not intend to make any material changes to our numbers on the back of this update, and reiterate our EUR 46 fair value estimate. We see attractive upside potential from the prevailing share price.

Edenred is the world leader in prepaid corporate services, with its main business in employee benefits, such as meal vouchers. This market is highly concentrated: In key region Brazil, for example, Edenred is the number-one player, followed closely by peers Sodexo and Alelo. Together, the three control 90% of the market. Edenred has a presence in over 46 countries and holds the number-one or number-two spot in each of its key markets.

Having lapped the easy comparatives of 2020 in the first half of the year, the third quarter was always going to be trickier. Wide-moat Edenred has stood up to the challenge however, producing revenue growth of almost 13% and tightening its guidance for operating profit for the full year. The company now expects to deliver in the upper half of the EUR 620 million-670 million range. We do not expect to make any major changes to our forecasts on the back of this update, and reiterate our EUR 42 fair value estimate. In light of the recent rallies in the share price there is little value to be had currently.

Wide-moat Edenred delivered a positive half-year update, as we lap the easy comparatives of 2020 and the beginning of the COVID-19 pandemic. Revenue rose by more than 30% on a like-for-like basis in the second quarter, while half-year revenue now stands 10% above this point in 2019. Operating margins continued to climb, reaching 39%, 2 percentage points higher than at this point last year. Although the shares are trading down today on the release, we believe this is more a reflection of the share’s premium valuation and the market’s lofty expectations, as we view the performance over the last six months to be robust. We reiterate our EUR 42 fair value estimate for the shares.