High-Security Logistics And Automation Will Unlock New Markets

Key Takeaways

• Strategic expansion into high-security logistics and tech-driven services is diversifying revenue streams and enhancing profitability through access to less commoditized, higher-margin markets.
  
• Operational improvements and targeted acquisitions are strengthening international presence, boosting efficiency, and supporting stable growth in core and emerging segments.
  
• Loomis faces persistent revenue and margin pressures from structural cash declines, slow diversification, and reliance on temporary or risky market pivots.

Catalysts

Provides secure payment solutions in the United States, France, Switzerland, Spain, the United Kingdom, Sweden, and internationally.

• Expansion into adjacent, high-security logistics services (e.g., Loomis Pharma & cross-border transport for valuables) leverages Loomis' existing expertise and network, opening new, less commoditized markets with higher margins and recurring revenue profiles-supporting future top-line and net margin growth.
  
• Resilient demand for physical cash handling, especially in key emerging and established markets, continues to drive stable growth in Loomis' core CIT and CMS segments, while persistent regulatory complexity benefits established, compliant operators-underpinning recurring revenues and pricing power.
  
• Ongoing technological investments in automation (smart safes, digital monitoring, cash recyclers) and Loomis Pay are enabling upselling, margin expansion and diversified revenue streams, positioning the company to capture a greater share of integrated security and cash management spending-impacting both revenue and earnings.
  
• Successful execution of restructuring, operational streamlining, and workforce reduction in Europe and Latin America is driving sustainable improvements in operating margins, supporting higher earnings even in a low or moderate growth environment.
  
• Continued focus on value-creating M&A (e.g., pharma logistics, POS solutions) is accelerating Loomis' diversification and international expansion, delivering scale benefits and positioning the company to capitalize on the industry trend towards bundled, outsourced commercial services-benefiting both revenue growth and operating leverage.

Loomis Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Loomis's revenue will grow by 1.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 5.7% today to 9.5% in 3 years time.
• Analysts expect earnings to reach SEK 3.1 billion (and earnings per share of SEK 40.29) by about August 2028, up from SEK 1.7 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.9x on those 2028 earnings, down from 15.4x today. This future PE is lower than the current PE for the GB Commercial Services industry at 19.6x.
• Analysts expect the number of shares outstanding to decline by 2.49% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 5.83%, as per the Simply Wall St company report.

Loomis Future Earnings Per Share Growth

Risks

• Loomis faces organic growth and margin headwinds from the loss of ATM business in Sweden and France, indicating a structural decline in cash-in-transit volumes in key European markets, which could negatively affect long-term revenue and operating margins.
  
• The company's restructuring-driven margin improvements in Europe and Latin America are partly achieved through significant headcount reduction; if declining cash usage persists, further operational downsizing may be required, compressing future earnings potential as fixed costs become harder to cover.
  
• Loomis' automation and digital payment ventures-such as Loomis Pay and SME/Pay-are still early-stage and not yet offsetting declines in core cash handling segments, risking top-line stagnation if diversification isn't fast or scalable enough to counter long-term secular shifts toward digital payments, pressuring future revenue growth.
  
• A strong reliance on cross-border valuables transportation has provided a margin boost temporarily due to factors like tariffs, but this impact is already flattening, and the contribution from such non-recurring drivers may wane, leading to volatility and potential weakness in earnings and margins.
  
• The company is increasing exposure to specialized niches (i.e., pharmaceutical logistics), which may require sustained investment and come with integration risk; if these adjacent markets do not scale as intended or face regulatory hurdles, Loomis could see muted returns on capital and lower net margins.

Valuation

• The analysts have a consensus price target of SEK456.25 for Loomis 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 SEK32.2 billion, earnings will come to SEK3.1 billion, and it would be trading on a PE ratio of 10.9x, assuming you use a discount rate of 5.8%.
• Given the current share price of SEK395.4, the analyst price target of SEK456.25 is 13.3% 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.