Analysis N°1
The Atos share price is particularly sensitive to British and North American economic conditions. Therefore closely monitoring the development of the economic health of these two markets is essential.
For several months, the Atos group has been facing some difficulties. Among these is the case of an unknown shareholder who claims to have exceeded the threshold of 5% of its capital.
The Atos share price is particularly sensitive to British and North American economic conditions. Therefore closely monitoring the development of the economic health of these two markets is essential.
Obviously, all news and announcements about current or future corporate takeover operations will have to be taken into account for their very strong impact on the share price, particularly in the United States.
All the strategic plans on which the Atos group is happy to communicate will be excellent indicators and monitoring the final and intermediate results to take a stand and anticipate good trends will be necessary. It's not uncommon for Atos to exceed the objectives set.
Finally as indicated above, keeping a close eye on the very strong competition in this sector of activity and on all the important publications from the main competitors of Atos is essential.
The Atos Company is a French group specialized in the IT services and consulting sector. It's even one of the worldwide leaders in this field. To better understand the different activities carried out by the group, they can be divided into different categories according to the turnover they generate like this:
Also bear in mind that the Atos group is currently developing a new activity focused on the outsourcing of business processes.
The turnover achieved by the Atos group can also be divided according to the target sectors of its activity. As follows, the industry, distribution and transport sector represents around 37.2% of its turnover, the public and health sector represents 28.9% of total turnover, financial services represent 17.9% of turnover and the telecoms and media sector generates 16% of the company's turnover.
From a geographic point of view, Atos is an international company that offers its services all over the world. The turnover generated in France is only 13.6%. Next comes the German market which represents 17.7% of turnover, then North America with 17.6% of turnover, the United Kingdom and Ireland with 13.5% of turnover and the Benelux with 8.5% of turnover. The rest of the world allows the group to generate the remaining 29.1% of turnover.
The Atos group ranks among the main IT service providers in the world. But it's obviously not the only one to engage in this type of activity and has to face very strong competition from giants of the sector. The classification of these companies specialized in IT services is obviously likely to evolve over time but represents a good basis for your fundamental analyses which really must include a complete study of the competition of the Atos group. First and foremost, you need to take an interest in the distribution of market shares of this sector of activity and follow the financial results, big operations or any important publications concerning the companies which we have just quoted and that can directly or indirectly impact the Atos online share price. Therefore please check out who the main international competitors of Atos are with the ranking of these global companies:
The American group IBM is at the top of this ranking.
It's closely followed by the Japanese group Fujitsu which occupies second place in the ranking.
Third place in this sector of activity is held by the American HP.
Another American is in fourth place in the ranking. It's the Dell group.
Next is the American company CSC which is found in fifth position.
The American group Accenture occupies sixth place in this world ranking.
Next comes the first French group in this ranking, the Capgemini Company, which occupies the seventh position.
The ninth and second to last place in this ranking is occupied by the Canadian company CGI.
Finally, tenth place in the ranking goes to the Japanese group NEC.
Although knowing the competition of the Atos group is essential before any strategy is put in place on the share price, you should also follow the partnerships and strategic alliances that the group sets up with other companies in order to boost its growth or expansion. To better understand what's interesting about these announcements, here are some recent examples of important partnerships set up by the group.
In April 2018, the Atos group set up a strategic partnership agreement with the web giant Google and its subsidiary Google Cloud as part of its support services for the digital transformation of businesses. The primary objective of this alliance is to create secure solutions in the field of hybrid cloud, data analysis and even machine learning or connected work environment. Atos collaborates with Google Cloud and provides its client companies with innovative and highly secure solutions in these areas. To do so, Atos has planned to launch three research and development centres and innovation laboratories both in Europe and in North America, whose research will be oriented towards machine learning and artificial intelligence. As a result, Google Cloud will become Atos' preferred partner in the public cloud field.
Also in 2018 but this June, the Atos group gained from a partnership agreement with the French car manufacturer PSA in order to accelerate the latter's digital transformation and integration with Opel- Vauxhall. The agreement will cover an initial period of 7 years and includes in particular the restoration of PSA's IT activities in Argentina with very important stakes for the PSA group. Atos will use its expertise to support French manufacturer in its digital transformation and create even more value on the business value chain. Atos will be particularly in charge of contributing in the development of the manufacturer's range of applications aimed at reducing delays in the availability of new digital applications while lowering maintenance costs.
Finally, in October 2018, Atos signed an agreement of the utmost importance with the NATO communication and information agency. The agreement concerns the exchange of information on cybersecurity and cyber threats between the two entities. Through this partnership, both entities will be able to improve their prevention, detection and response capacities to various possible threats. It's essential that the NATO communication and information agency operate and protect the organization's networks and has therefore chosen a new industrial partner with Atos. Atos is not the first IT service company to join NATO with the same agenda since Vodafone or even Thales have also signed similar agreements in the recent past.
Of course, the positioning of the Atos company in the IT services market is in itself a strength that it is interesting to discuss here. It should be remembered that the Group is ranked eighth in the world ranking of this sector, which makes it attractive to stock market investors and shareholders.
Another advantage to be highlighted in this value is the division of the Atos Group's activities into different, distinct and rather balanced business units. It should be noted that while the majority of these activities are still in services, which account for 57% of the company's revenues, the Group is also active in other segments such as consulting and systems integration, secure payments and Big Data and cyber security. This varied portfolio of services naturally enables it to diversify its sources of revenue but also to offer a more complete range of services to its customers and prospects.
Atos' business mix and positioning in the different countries in which it operates is still an important asset as it is also very balanced. Atos' strong presence in the United States market is in particular a major advantage in view of the opportunities offered by this sector. This good geographical spread of activities also allows Atos to effectively hedge against the risks of a targeted economic crisis or a decline in demand with revenues coming from various countries.
The Atos Group is also known to analysts and investors for the quality of its expansion and diversification strategy, which is largely based on strategic acquisitions of other companies.
The fact that Atos is increasingly developing its offshore presence is also a rather favourable argument for its growth.
Finally, and to conclude with the advantages and strengths of the Atos Group and its share on the stock market, we can of course underline here the fact that investors and shareholders are strongly reassured by an order book that offers excellent visibility with order amounts exceeding the company's annual revenue. In a more global way, we also appreciate the very good financial situation of the company Atos over the last few years and over the longer term.
While the Atos Group has many advantages that naturally make its stock market share very attractive to investors, you should also take into account its shortcomings and disadvantages. This is what we propose to do right now with a summary of the main weak points of this group which could therefore hinder its future growth and the rise of its stock market share price.
First of all, and while the division of Atos' activities into different categories has been highlighted as an undeniable advantage, it is regrettable that there are significant differences in the profitability of each division. This glaring imbalance is not improving over time and could have consequences on the overall operating profitability of the Group.
In some specific segments, such as Consulting and Systems Integration, Atos is facing strong competition because it is not able to distinguish itself from its main competitors and therefore lacks competitiveness. This is in addition to another weakness of the Group, which is the overweight of the services business, which has been facing strong pricing pressures in recent years.
Still with regard to the shortcomings of this value, investors also express doubts about the validity of the ramp-up of traditional activities such as infrastructure management and about the capacity for organic revenue growth.
Finally, the fact that the Atos share price is evolving at very high levels that it has not reached since 2014 can be considered by some investors as an important selling signal.
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