Edenred: Organic Revenue Growth Accelerates

With Edenred’s EDEN organic revenue growth of almost 26%, one could be forgiven for assuming that comparative sales numbers this time last year were weak. However, this was not the case, with growth in the first quarter of the year simply a reflection of the momentum behind the business currently. We reiterate our EUR 50 fair value estimate. However, given the rally in the share price over the last month, we view the shares as fairly valued.

Growth was strong across the board, but employee benefits definitely led the way, with like-for-like growth of almost 23%. Inflation certainly seems to be benefiting the business, with governments in several countries increasing the allowed face value of Edenred’s Ticket Restaurant vouchers, which has fed directly into revenue growth for the business. Geographically, the “rest of the world” segment was the standout, with growth of more than 35% as corporate payment solutions gained traction in North America.

In the current macroeconomic environment, with high inflation and rising interest rates, it’s difficult to find stocks that can withstand the onslaught, let alone thrive. However, Edenred is well positioned with the value of its products and services generally rising in tandem with inflation, and with positive working capital the business also benefits from rising interest rates that drive interest income higher.