Urbanization And Digitization Will Expand Integrated Security Opportunities

Key Takeaways

• Aggressive contract optimization, portfolio focus, and completed integration efforts are driving higher margins, reliable earnings growth, and a profitable shift toward technology-driven solutions.
  
• Market consolidation, strategic divestments, and capital discipline enable expansion in high-growth security segments, fostering outsized, recurring revenue and strong return potential.
  
• Structural challenges, slow contract cleanup, underperformance in tech growth, and rising competitive and regulatory pressures threaten profitability, margins, and future revenue streams.

Catalysts

Provides security services in North America, Europe, Latin America, Africa, the Middle East, Asia, and Australia.

• Analyst consensus expects SEK 200 million in savings by 2025 from Securitas' optimization program, yet the aggressive contract pruning and active renegotiation underway-across multiple regions and including large, previously unaddressed low-margin contracts-positions Securitas to achieve not just a near-term margin uplift but also unlock a structurally higher net margin run-rate into 2026 and beyond, especially as stranded costs are eliminated.
  
• While analysts broadly see margin benefits from the completed STANLEY integration and focus on Technology and Solutions, the company's re-energized go-to-market strategy and commercial orchestration-now fully focused post-integration-makes a prolonged acceleration in revenue growth and sustained mix shift toward high-margin technology solutions likely, further boosting both revenue and EBITDA.
  
• Sustained urbanization trends and escalating geopolitical risks have made security non-discretionary for a growing customer base, which is already reflected in Securitas' 90% retention rate and the rise of high-value, recurring contracts; this creates long-term, predictable revenue streams and supports high-visibility, multi-year earnings growth.
  
• The convergence of physical and cyber security driven by digitization-especially in sectors like e-commerce, data centers, and critical infrastructure-uniquely positions Securitas to expand wallet share in these fast-growth verticals, leading to outsized top-line growth and premium margin expansion relative to legacy competitors.
  
• With divestments (such as the aviation business in France and likely SCIS in the US) sharpening the focus on scalable, core segments and the company's proven ability to deploy discipline in M&A, Securitas is poised to capitalize on market consolidation and further leverage its balance sheet, driving both accretive revenue growth and enhanced return on capital.

Securitas Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Securitas compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Securitas's revenue will grow by 3.3% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 3.3% today to 5.7% in 3 years time.
• The bullish analysts expect earnings to reach SEK 10.2 billion (and earnings per share of SEK 17.78) by about July 2028, up from SEK 5.4 billion today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 12.0x on those 2028 earnings, down from 15.3x today. This future PE is lower than the current PE for the GB Commercial Services industry at 19.3x.
• 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 5.92%, as per the Simply Wall St company report.

Securitas Future Earnings Per Share Growth

Risks

• The company's core Guarding business, especially in units like Securitas Critical Infrastructure Services (SCIS), faces long-term structural challenges from commoditization and price-driven contracts, making it difficult to achieve sustainable profitability and potentially leading to declining net margins.
  
• Securitas continues to experience pressure from low-performing or unprofitable contracts in Europe and Ibero-America, and while management is seeking to renegotiate or terminate these, the cleanup is slow and painful, creating near-term revenue headwinds and increased stranded and restructuring costs, which could weigh on earnings during the transition period.
  
• The company's technology and solutions segment is growing below its targeted 8% to 10% range, reflecting execution challenges in fully realizing synergies from previous acquisitions and in capturing accelerated demand for digital solutions, which hampers long-term top-line growth and limits the positive margin mix shift.
  
• Automation, AI, and entry of new technology competitors threaten to erode market share and undercut legacy manned guarding, while Securitas' legacy labor-heavy cost structure impedes its ability to pivot quickly to higher-margin, tech-enabled offerings, putting long-term revenue streams and profits at risk.
  
• Ongoing wage pressures, localized labor shortages, and increased regulatory and compliance burdens are expected to raise operating expenses and compliance costs, resulting in persistent squeezes on operating margins and potential volatility in net income over the coming years.

Valuation

• The assumed bullish price target for Securitas is SEK180.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Securitas's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK180.0, and the most bearish reporting a price target of just SEK112.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be SEK179.0 billion, earnings will come to SEK10.2 billion, and it would be trading on a PE ratio of 12.0x, assuming you use a discount rate of 5.9%.
• Given the current share price of SEK144.8, the bullish analyst price target of SEK180.0 is 19.6% 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.