Veteranpoolen will thrive as aging demographics fuel 11% revenue growth

Catalysts

• Industry Tailwinds: Demographic Shift, an aging population with increasing financial needs and a desire to stay active is driving demand for part-time and flexible work options. Regulatory Support, policy initiatives promoting longer working lives and flexible scheduling are creating an environment favorable to staffing solutions tailored for older workers.

Assumptions

• Based on the historical data, Veteranpoolen’s revenue grew from about SEK 97 million in late 2014 to roughly SEK 552 million in Q3 2024—a compound annual growth rate (CAGR) of around 19% over the past 10 years. However, recent quarters show a more moderated pace, suggesting that as the company matures and its niche market approaches saturation, growth may ease.Taking these factors into account, a reasonable forecast for the next five years would be in the 10–12% annual range. Using 11% in the model for the upcoming 5 years
• Historically, Veteranpoolen’s profit margin (measured as earnings divided by revenue) has generally hovered between about 7% and 9% over the past several years. For example, in the most recent quarter (30 Sep 2024), the company reported earnings of SEK 45 million on revenues of SEK 552 million—roughly an 8% margin. Looking back, recent data from 2018 onward tends to show margins in the low to mid 8% range.Assuming the company maintains its operational efficiencies and cost structure while scaling revenue at a moderate pace (forecasted around 10–12% annually), it would be reasonable to expect the profit margin to remain stable in the 8–9% range over the next five years.

Risks

• Economic and Market Risk: In the event of an economic downturn similar operations take a beating on the revenue end on top of that if rising operational costs, employers may prioritize younger, lower-cost workers over older employees, reducing demand for staffing services specifically catering to seniors (also as younger may be more available in a weaker market). This shift could pressure both revenues.

Valuation

• Assuming that a stable growth trajectory of roughly 10–12% annually prevails and margins remain steady, it would be reasonable for Veteranpoolen's current forward PE of 16.9x to expand to around 18–22x over the next five years. This re-rating aligns with competitor figures—for example, Ework Group trades at 19.2x with a 20.7% growth forecast and the overall European Professional Services industry average is about 20.3x—reflecting an improved risk profile and growth outlook for the company. Using 18 in the model, to be conservative.
• Taking Simply Wall Street’s default discount rate of 5.15% as a starting point and adding an additional 2% to account for the company’s smaller size and its exposure to the cyclic nature of the market, a revised discount rate of approximately 7.15% seems appropriate. This higher rate reflects the extra risk premiums required for companies with these characteristics.

To be on the lookout for in upcoming Q reports

• Revenue & Margin Stability: Validate the thesis by confirming that revenue growth moderates to around 10–12% annually (e.g., an 11% rate) while maintaining stable profit margins in the 8–9% range. This would indicate that operational efficiencies and cost controls are sustained even as the market niche matures from its historical ~19% CAGR.
• Economic Environment & Workforce Preference: Monitor macroeconomic conditions and any shifts in employer hiring preferences—specifically, whether economic downturns or rising costs lead employers to favor younger, lower-cost workers over older, experienced ones. Additionally, keep an eye on regulatory developments that support longer working lives and flexible scheduling, as these are critical tailwinds for the business model.