Adecco Group AG Just Beat EPS By 12%: Here's What Analysts Think Will Happen Next

Adecco Group AG (VTX:ADEN) shareholders are probably feeling a little disappointed, since its shares fell 5.7% to CHF25.52 in the week after its latest quarterly results. Revenues were €5.7b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of €0.59 were also better than expected, beating analyst predictions by 12%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Adecco Group

Following last week's earnings report, Adecco Group's 13 analysts are forecasting 2025 revenues to be €23.8b, approximately in line with the last 12 months. Statutory earnings per share are predicted to leap 35% to €2.40. Yet prior to the latest earnings, the analysts had been anticipated revenues of €24.1b and earnings per share (EPS) of €2.53 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

The average price target fell 5.1% to CHF32.06, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Adecco Group, with the most bullish analyst valuing it at CHF40.26 and the most bearish at CHF24.46 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Adecco Group's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 1.5% growth on an annualised basis. This is compared to a historical growth rate of 2.5% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.7% annually. Factoring in the forecast slowdown in growth, it seems obvious that Adecco Group is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Adecco Group. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Adecco Group's revenue is expected to perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn't be too quick to come to a conclusion on Adecco Group. Long-term earnings power is much more important than next year's profits. We have forecasts for Adecco Group going out to 2026, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Adecco Group (2 are potentially serious!) that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.