US And APAC Expansion Will Unlock Digital Security Opportunities

Key Takeaways

• Expansion in key global markets and increased focus on technology-driven services support diversified growth and higher-profit-margin opportunities.
  
• Operational efficiencies, cost-saving initiatives, and a shift toward recurring revenue models bolster financial resilience and long-term earnings stability.
  
• Exposure to emerging market instability, declining cash-based services, rising labor costs, and delayed tech-driven growth threatens Prosegur's revenue stability and future margin performance.

Catalysts

Operates in the private security sector.

• Expansion in the U.S. and APAC regions, where both security and cash businesses are growing at above-average rates, positions Prosegur to capitalize on rising urbanization and asset concentration in high-growth markets, supporting future revenue growth and geographic diversification.
  
• Increasing share of technology-enabled services (notably in Security and Alarm businesses, where high-end tech solutions and connections exceeded 1 million) leverages the industry shift toward digital, integrated security-expected to drive higher-margin offerings and improved net margins over time.
  
• Implementation of transformational cost-saving programs in the Cash business (with an anticipated 1.5-year payback) and enhanced fleet optimization are likely to structurally boost EBITA margins and accelerate deleveraging, positively impacting earnings and reducing financial risk.
  
• Effective ability to pass through inflation and costs to clients across business lines-reflected in continued organic sales growth and margin preservation-suggests better resilience to labor and inflationary pressures, supporting long-term EBITDA and cash flow stability.
  
• Continued investment in recurring revenue models (notably, subscription-based Alarms with rising connections, ARPU, and margin improvements) enhances revenue visibility and predictability, supporting long-term top-line growth and incremental expansion in operating margins.

Prosegur Compañía de Seguridad Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Prosegur Compañía de Seguridad's revenue will grow by 3.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from 2.1% today to 2.8% in 3 years time.
• Analysts expect earnings to reach €160.0 million (and earnings per share of €0.29) by about July 2028, up from €104.7 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €191 million in earnings, and the most bearish expecting €137 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.5x on those 2028 earnings, up from 13.0x today. This future PE is greater than the current PE for the GB Commercial Services industry at 12.7x.
• 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 11.29%, as per the Simply Wall St company report.

Prosegur Compañía de Seguridad Future Earnings Per Share Growth

Risks

• Intensifying currency volatility and macroeconomic instability in emerging markets-particularly Argentina and across Latin America-continue to impact Prosegur's revenues and reported earnings, as evidenced by negative FX effects and reliance on normalization for performance improvement, posing long-term risks to cash flow predictability and margin consistency.
  
• Persistent structural shift toward cashless economies in developed markets threatens Prosegur's cash-in-transit and cash management businesses, a significant revenue segment, potentially resulting in lower growth rates and long-term contraction in this traditional business line.
  
• Ongoing wage inflation and labor cost pressures-highlighted by high severance expenses related to cost-saving and restructuring programs-challenge Prosegur's ability to sustain operating margins if future labor markets tighten further or automation/price pass-throughs become less effective.
  
• Heavy investment in marketing and customer acquisition within the Alarm business, with management warning of elevated costs persisting at least through 2025, could weigh on short to medium-term profit margins and delay accretive cash flow, especially if client churn or ARPU fails to keep pace.
  
• While the company emphasizes technology adoption as a growth pillar, the text indicates that growth is still highly reliant on volume and cost discipline in traditional services; slow progress into higher-margin, tech-driven solutions may expose Prosegur to long-term revenue and margin decline as competition from more innovative or digital-first security providers accelerates.

Valuation

• The analysts have a consensus price target of €3.154 for Prosegur Compañía de Seguridad based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €4.0, and the most bearish reporting a price target of just €2.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €5.6 billion, earnings will come to €160.0 million, and it would be trading on a PE ratio of 14.5x, assuming you use a discount rate of 11.3%.
  
• Given the current share price of €2.55, the analyst price target of €3.15 is 19.0% 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.