Digital Learning And Demographic Trends Will Create Opportunity

Key Takeaways

• Strategic investments in digital learning and AI tools position the company to benefit from growing demand for professional education and tailored sector training.
  
• Structural labor market trends and a broad customer base support long-term growth and resilience, while operational efficiencies drive sustained profitability improvement.
  
• Weak client demand, regulatory disruptions, margin pressure, lack of strategic adaptation, and unsustainable dividends threaten Amadeus FiRe's growth, earnings stability, and long-term competitiveness.

Catalysts

Provides personnel and training services in Germany.

• The persistent demographic shift toward an aging workforce and ongoing skill shortages across the German and European labor markets continue to serve as structural tailwinds for Amadeus FiRe; once client risk aversion abates, these shortages are likely to reignite demand for recruitment and upskilling services, providing a foundation for long-term revenue and earnings growth.
  
• The company's continued investment in digital learning formats, AI-supported CRM systems, and the development of an integrated educational ecosystem is positioning Amadeus FiRe to capture rising demand for continuous professional education and sector-specific training, enabling margin expansion and supporting future profit growth.
  
• Delays and disruptions in government-funded training (due to regulatory changes and budget uncertainty in Germany) are likely to be temporary, with stabilization and a potential pickup in participant volumes-and thus, revenue and earnings recovery-expected as public funding flows normalize from late 2025 into 2026.
  
• Cost optimization measures (including headcount management and IT cost controls) implemented during the downturn are expected to yield lasting operational efficiency benefits, improving net margins and positioning the company for higher earnings when revenue growth resumes.
  
• The group's diversified, broad-based customer base and sustained focus on expanding value-added B2C training offerings (e.g., advanced technical certifications and tax/accounting qualifications) will provide additional resilience and incremental growth opportunities, supporting both revenue stability and higher overall margins over the long term.

Amadeus FiRe Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Amadeus FiRe's revenue will decrease by 0.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 4.2% today to 7.9% in 3 years time.
• Analysts expect earnings to reach €32.0 million (and earnings per share of €4.94) by about August 2028, up from €16.7 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.6x on those 2028 earnings, down from 20.1x today. This future PE is lower than the current PE for the GB Professional Services industry at 21.1x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.49%, as per the Simply Wall St company report.

Amadeus FiRe Future Earnings Per Share Growth

Risks

• Persistent weakness in client demand for staffing and training services-driven by ongoing economic uncertainty, delayed client decision-making, and reluctance of both companies and candidates-has resulted in a significant decline in revenues (down ~20%) and gross profit (>20%), pressuring topline growth and leading management to warn of no recovery in 2025, which may challenge a return to revenue growth in the medium term.
  
• Structural and regulatory changes in the German public training market-such as delays in federal budget approval and shifting responsibility for training voucher distribution-have led to a sharp decline in B2G training participants and prolonged top-line and earnings declines in the Training segment (e.g., Comcave and GFN), risking ongoing volatility in this large part of the business and impairing group earnings stability.
  
• Margin pressure is intensifying as Amadeus FiRe must maintain branch office infrastructure and key personnel despite a lower volume of business, with EBITA margin deteriorating to 3.4% and earnings per share falling sharply; continued cost savings are necessary just to stabilize profitability, suggesting sustained pressure on net margins and overall earnings.
  
• The company's reliance on cost controls and lack of meaningful structural adaptation (i.e., branch closures or significant reskilling initiatives) may leave Amadeus FiRe ill-prepared to address longer-term secular challenges such as automation and platformization, which could erode demand for traditional staffing and recruitment services and, ultimately, further squeeze revenues and market share.
  
• Continued high dividend payouts (2/3 of EPS) despite sharply reduced earnings and pressured cash flow raise risks of payouts being funded from company reserves ("paying dividends from the substance"), potentially undermining financial flexibility, constraining future investment in digital transformation and acquisitions, and increasing the risk of dividend cuts if earnings do not recover.

Valuation

• The analysts have a consensus price target of €96.0 for Amadeus FiRe based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €403.2 million, earnings will come to €32.0 million, and it would be trading on a PE ratio of 17.6x, assuming you use a discount rate of 5.5%.
• Given the current share price of €61.5, the analyst price target of €96.0 is 35.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.