Leveraging Business Insight Services In Scandinavia Will Unlock Future Opportunities

Key Takeaways

• Enento Group's innovative services and strong market position in consumer credit information can drive future revenue growth despite regulatory challenges in Sweden.
  
• Strategic expansion into new verticals and efficiency programs aim to enhance profitability and strengthen Enento's market presence in Nordic countries.
  
• Decreasing demand and regulatory challenges in Sweden and Finland, along with rising costs, are impacting Enento Group's profitability and future growth prospects.

Catalysts

Through its subsidiaries, provides digital business and consumer information services in the Nordic countries.

• Enento Group has been consistently successful in launching innovative services like fraud prevention, open banking data, and compliance offerings, particularly targeting Swedish market expansion. This is likely to drive future revenue growth.
  
• The company maintains its #1 market position in consumer credit information services, supported by trusted brands UC in Sweden and Asiakastieto in Finland. This positions Enento strongly to capitalize on improving macroeconomic conditions, potentially enhancing its revenue streams and net margins.
  
• Despite regulatory headwinds in Sweden impacting the consumer credit market in the short term, Enento is poised to benefit from long-term market consolidation and demand through enhanced service offerings like real estate ESG data and API solutions, likely boosting revenue and margins.
  
• Enento's ongoing efficiency programs and cost control measures, including the completed €10 million cost-saving target, aim to improve profitability by optimizing operating expenses and strengthening free cash flows, potentially leading to enhanced earnings.
  
• The focus on expanding into new verticals and leveraging insights from Business Insight services in Finland, Norway, and Denmark, positions Enento for strategic growth in SME services and compliance offerings, which is expected to positively impact revenue growth.

Enento Group Oyj Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Enento Group Oyj's revenue will grow by 3.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 8.1% today to 16.1% in 3 years time.
• Analysts expect earnings to reach €26.5 million (and earnings per share of €1.12) by about March 2028, up from €12.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 21.4x on those 2028 earnings, down from 32.2x today. This future PE is lower than the current PE for the GB Professional Services industry at 26.2x.
• Analysts expect the number of shares outstanding to decline by 0.19% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.59%, as per the Simply Wall St company report.

Enento Group Oyj Future Earnings Per Share Growth

Risks

• Decline in net sales and adjusted EBITDA margin due to decreased demand for consumer credit information services in Sweden and Finland could negatively impact net margins and overall profitability.
  
• Regulatory changes in Sweden, including stricter banking license requirements and measures to prevent over-indebtedness, are expected to pressure the consumer credit market, leading to ongoing uncertainties and potential revenue decline.
  
• The structural decline in the Swedish consumer credit market has already resulted in a €13 million revenue loss over the past two years, significantly impacting the group’s profitability due to the fixed cost business model.
  
• Rising data acquisition costs and increased governmental data prices, along with a weakening sales mix towards lower-margin products, are creating margin pressures, especially in the Finnish market.
  
• The ongoing transformation in Sweden’s SME segment and challenges in reaching growth targets for newly launched services introduce execution risk, potentially affecting future revenue and earnings growth.

Valuation

• The analysts have a consensus price target of €20.375 for Enento Group Oyj 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 €25.0, and the most bearish reporting a price target of just €17.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €164.9 million, earnings will come to €26.5 million, and it would be trading on a PE ratio of 21.4x, assuming you use a discount rate of 6.6%.
• Given the current share price of €16.54, the analyst price target of €20.38 is 18.8% 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.