Spin-off setbacks, but the stock has overreacted
Q1 was operationally in line with expectations, and we kept our forecasts unchanged in the big picture. However, the biggest news yesterday was that the Banking business will unexpectedly remain part of the group, which was disappointing. In 2024, we expect the company’s earnings to be at the level of the comparison period, due to a challenging market, but to grow moderately in the coming years. Our forecasts are clearly below the company’s target levels. With the share price decline, the valuation picture has become very attractive from several perspectives (2024e P/E 11x, adj. P/E 8x, DCF EUR 28, SOTP EUR 26 and expected return ~20%).
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Tietoevry
Tietoevry is active in the IT sector. The company offers a range of software and cloud-based solutions, with the greatest specialist expertise in SaaS solutions. Expertise is found in business processes, application services, infrastructure solutions, and front-end solutions. Customers are found in a number of markets on a global level. The company was created in 2019 via a merger of Tieto and EVRY. The head office is located in Helsinki.
Read more on company pageKey Estimate Figures25.04.
2023 | 24e | 25e | |
---|---|---|---|
Revenue | 2,851.4 | 2,893.8 | 2,977.1 |
growth-% | -2.62 % | 1.49 % | 2.88 % |
EBIT (adj.) | 358.7 | 364.2 | 383.6 |
EBIT-% (adj.) | 12.58 % | 12.58 % | 12.88 % |
EPS (adj.) | 2.14 | 2.09 | 2.28 |
Dividend | 1.47 | 1.50 | 1.55 |
Dividend % | 6.82 % | 8.77 % | 9.06 % |
P/E (adj.) | 10.06 | 8.18 | 7.50 |
EV/EBITDA | 8.56 | 6.58 | 6.31 |