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Adecco Group AG (CH:ADEN)
:ADEN
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Adecco Group AG
(ADEN)
Rating:71Outperform
Price Target:
CHF28.00
▲(9.89%Upside)
Positive Factors
Flexible Placement
Adecco experienced modest positive momentum in flexible placement volumes, which has been broad-based and consistent across geographies.
Growth in North America
North America has now returned to growth with an exit growth rate of +4%.
Valuation Opportunity
The current share price is considered an attractive opportunity due to its valuation being below mid-cycle.
Negative Factors
Macroeconomic Uncertainty
Ongoing macroeconomic uncertainty, like potential impacts from US tariffs and EU cyclical recovery, poses a challenge for Adecco in the near term.
Project Cancellations
Projects with auto OEM are being stopped, delayed or cancelled, which is putting pressure on volume, utilization rate, and margins.
Structural Decline
Adecco suffered disproportionately because of lower volumes, with their 3 largest customers facing structural decline.
Adecco Group AG (ADEN) vs. iShares MSCI Switzerland ETF (EWL)
Market Cap
CHF4.21B
Dividend Yield0.18%
Average Volume (3M)750.10K
Price to Earnings (P/E)15.3
Beta (1Y)1.20
Revenue Growth-4.20%
EPS Growth-6.26%
CountryCH
Employees33,597
SectorIndustrials
Sector Strength87
IndustryStaffing & Employment Services
Share Statistics
EPS (TTM)0.45
Shares Outstanding168,426,560
10 Day Avg. Volume674,224
30 Day Avg. Volume750,104
Financial Highlights & Ratios
PEG Ratio-3.57
Price to Book (P/B)1.29
Price to Sales (P/S)0.00
P/FCF Ratio9.32
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
CHF30.75Price Target Upside20.68% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Adecco Group AG Business Overview & Revenue Model
Company DescriptionAdecco Group AG, together with its subsidiaries, provides human resource services to businesses and organizations in Europe, North America, Asia Pacific, South America, and North Africa. It offers flexible placement, permanent placement, outsourcing, training, upskilling and reskilling, career transition and workforce transformation, technology consulting and talent, tech academy, digital staffing services, and talent advisory and solutions under the Adecco, Adia, General Assembly, Badenoch + Clark, LHH, pontoon, Spring, and Modis. The company also operates Hired, a talent recruitment platform. As of December 31, 2021, it operated approximately 4,300 branches in 59 countries and territories. The company was formerly known as Adecco S.A. Adecco Group AG was founded in 1957 and is based in Zurich, Switzerland.
How the Company Makes MoneyAdecco Group AG generates revenue primarily through the provision of temporary staffing and permanent placement services. Temporary staffing, which involves supplying clients with workers for short-term assignments, is the largest revenue stream. The company charges clients an hourly rate for each temporary worker, which includes the worker's wage plus a markup for Adecco's services. Permanent placement services involve fees charged to clients for successfully placing candidates in full-time positions, typically calculated as a percentage of the hired candidate's first-year salary. Additionally, Adecco earns from outsourcing services, where it manages specific HR functions for clients, and from career transition and talent development programs that provide training and support for workforce upskilling and reskilling. Strategic partnerships and a broad geographic presence also contribute to its earnings by allowing access to diverse markets and industries.
Adecco Group AG Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 22.97%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with significant market share gains and strategic advancements in AI deployment. However, these positives were offset by revenue declines, challenges in specific regions like Germany and France, and a cash flow deficit. While there are promising signs of operational improvements and strategic wins, the financial metrics indicate areas of concern that need addressing.Q1-2025 Updates
Positive Updates
Market Share Gains
Adecco Group gained 130 basis points market share compared to key competitors, with a further 30 basis points gain at the group level in Q1 2025.
Strong Performance in Adecco Americas and APAC
Adecco Americas revenues grew 4%, driven by North America's return to growth and robust SME growth, while APAC revenues increased by 11% with strong share gains in Japan, Asia, and India.
Innovative AI Deployments
The launch of pre-screening AI agents in the UK and the AI-Core Platform suite in Germany promises efficiency gains and cost savings.
Successful Client Wins
Significant contracts secured with a German IT services provider and a leading market research company, demonstrating the value of Adecco's integrated service offerings.
Negative Updates
Revenue and Margin Decline
Group revenues were €5.6 billion, down 2% year-on-year, and the gross margin fell by 40 basis points to 19.4%, reflecting lower business income.
Challenges in Akkodis Germany
Akkodis Germany faced an 8% revenue decrease, with significant pressure in the auto sector, leading to a restructuring plan.
France Revenue Decline
French revenues dropped 9% due to market headwinds and pressure from major clients, impacting the EBITA margin by 60 basis points.
Cash Flow Deficit
Cash flow from operating activities was negative €144 million, reflecting working capital absorption and lower business income.
Company Guidance
During the Adecco Group's first quarter 2025 earnings call, the company reported several key metrics reflecting its financial performance and strategic progress. Revenues for the quarter were €5.6 billion, showing a 2% year-on-year decline on an organic, trading days-adjusted basis, but a 3% sequential increase. The gross margin stood at 19.4%, 40 basis points lower than the previous year due to business mix and pricing strategies. EBITA, excluding one-offs, was €132 million, resulting in a margin of 2.4%, also 40 basis points lower year-on-year. Adjusted EPS was $0.48, marking a 20% year-on-year decrease. Cash flow from operating activities was negative at €144 million, with a cash conversion ratio of 105%. The company continues to focus on market share gains, evidenced by a 30 basis point rise this quarter, and is implementing strategic initiatives such as adopting AI solutions and executing turnaround plans in specific regions. The guidance for Q2 indicates expectations of a lower sequential gross margin due to normal seasonality, with SG&A expenses anticipated to be modestly lower sequentially as the company manages capacity and seeks further G&A savings.Adecco Group AG Financial Statement Overview
Summary
Adecco Group AG demonstrates stable financial performance with moderate profitability and effective cash conversion. Challenges exist in revenue growth and improving net margins. Adecco should focus on enhancing profitability and free cash flow generation while managing debt to ensure continued financial health.Income Statement
Adecco Group AG shows a slight decline in revenue over the TTM, with a decrease from the previous year. The Gross Profit Margin for TTM stands at 19.35%, suggesting reasonable cost management. However, the Net Profit Margin is relatively low at 1.26%, indicating challenges in translating revenue into profit. The EBIT and EBITDA margins for TTM are 2.30% and 3.18%, respectively, reflecting a moderate operating performance. Overall, the income statement reflects stable but modest profitability with room for improvement in net income growth.65
Positive
Balance Sheet
The Balance Sheet shows a stable financial position with an Equity Ratio of 29.52%, indicating a moderate reliance on equity financing. The Debt-to-Equity Ratio is 1.01, highlighting a balanced use of debt and equity. Return on Equity (ROE) for TTM is 8.20%, which is moderate and suggests reasonable returns for shareholders. However, the company should monitor its debt levels to ensure financial flexibility.70
Positive
Cash Flow
Adecco Group AG's cash flow statement reveals a decline in Free Cash Flow, with a growth rate of -12.79% over the TTM period. The Operating Cash Flow to Net Income Ratio is 2.17, indicating a strong ability to convert net income into cash flow. The Free Cash Flow to Net Income Ratio is 1.69, reflecting efficient cash generation relative to net earnings. The cash flow statement shows solid cash conversion, but declining free cash flow growth warrants attention.68
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 23.14B | 23.96B | 23.64B | 20.95B | 19.56B |
| Gross Profit | 4.50B | 4.97B | 4.97B | 4.28B | 3.79B |
| EBITDA | 760.00M | 841.00M | 770.00M | 971.00M | 307.00M |
| Net Income | 303.00M | 325.00M | 342.00M | 586.00M | -97.00M |
Balance Sheet | |||||
| Total Assets | 12.10B | 12.43B | 13.26B | 11.87B | 9.79B |
| Cash, Cash Equivalents and Short-Term Investments | 482.00M | 556.00M | 782.00M | 3.05B | 1.49B |
| Total Debt | 3.48B | 3.67B | 3.70B | 3.48B | 2.29B |
| Total Liabilities | 8.51B | 8.83B | 9.36B | 8.06B | 6.57B |
| Stockholders Equity | 3.58B | 3.60B | 3.88B | 3.79B | 3.21B |
Cash Flow | |||||
| Free Cash Flow | 563.00M | 347.00M | 328.00M | 590.00M | 563.00M |
| Operating Cash Flow | 707.00M | 563.00M | 543.00M | 722.00M | 720.00M |
| Investing Cash Flow | -157.00M | -209.00M | -1.45B | -206.00M | -162.00M |
| Financing Cash Flow | -634.00M | -620.00M | -1.38B | 980.00M | -290.00M |
Adecco Group AG Technical Analysis
Positive
25.48
Price Trends
23.92
Positive
23.77
Positive
23.21
Positive
Market Momentum
0.54
Positive
58.18
Neutral
35.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CH:ADEN, the sentiment is Positive. The current price of 25.48 is above the 20-day moving average (MA) of 24.98, above the 50-day MA of 23.92, and above the 200-day MA of 23.21, indicating a bullish trend. The MACD of 0.54 indicates Positive momentum. The RSI at 58.18 is Neutral, neither overbought nor oversold. The STOCH value of 35.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CH:ADEN.
Adecco Group AG Peers Comparison
Overall Rating
UnderperformOutperform
Sector (69)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | CHF4.21B | 15.30 | 0.18% | -4.20% | -6.26% | ||
69 Neutral | 4.58B | 9.73 | 12.94% | 325.49% | 4.42% | 4.61% | |
| ― | CHF96.31B | 26.53 | 31.19% | 0.07% | ― | ― | |
74 Outperform | CHF20.06B | 16.69 | 4.76% | 13.34% | -4.15% | ||
| ― | $39.71B | 35.71 | 20.88% | <0.01% | ― | ― | |
70 Outperform | CHF16.07B | 26.78 | 3.88% | 2.60% | 3.16% | ||
| ― | $8.98B | 24.43 | 11.24% | <0.01% | ― | ― |
* Industrials Sector Average
Performance Comparison
CH:ADEN
Adecco Group AG
25.48
-2.98
-10.47%
GB:0NX2
ABB Ltd
52.26
4.10
8.51%
CH:KNIN
Kuehne + Nagel International AG
173.25
-82.91
-32.37%
SHLAF
Schindler Holding AG
392.05
139.18
55.04%
CH:SGSN
SGS SA
82.50
-6.30
-7.09%
UZAPF
Flughafen Zurich AG
297.35
73.70
32.95%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.