Edenred shares: Price analysis before buying or selling

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Yes

ISIN code: NL0006294274

Ticker: EPA: ENX

Index or market: Euronext Paris

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Elements to consider before selling or buying Edenred shares

Analysis N°1

First, we will closely monitor the number of franchises that Edenred has created that can help it reduce total balance sheet assets.

Analysis N°2

Similarly, we will keep an eye on the actions taken by the Edenred group with the aim of boosting its development in certain countries whose markets are expanding, such as Brazil, China or India and Russia.

Analysis N°3

Of course, we will also be monitoring the overall development of the hotel and corporate financial services market.

Analysis N°4

Competition is of course an indicator that should not be overlooked by closely monitoring the market share of each of the major global players in this sector and the various publications.

Analysis N°5

Lastly, the Group will continue to monitor the foreign exchange market and currency fluctuations, which may affect Edenred's profitability abroad.

Analysis before buying or selling Edenred shares

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General presentation of Edenred

The French group Edenred is currently the world leader in its sector of activity. It offers transaction solutions for companies, their employees and merchants. Edenred is best known for its paper-based vouchers that can be used to pay for purchases, food, travel and other products and services, but the company has expanded its activities to include other transaction media such as cards, mobile phones and certain online payment platforms.

Through these various solutions, Edenred enables companies to offer their employees more purchasing power via the works council. But it also enables some of the group's partner retailers to increase their turnover by gaining market share.

The services offered by Edenred can be divided into three main categories according to the type of business concerned:

Employee benefits such as luncheon vouchers and holiday vouchers.
Professional mobility solutions with transport tickets or car rental.
And complementary solutions such as business-to-business payments, incentives and rewards, and some public social programs.

Today, Edenred's offer reaches no less than 43 million employees, 750,000 companies or local authorities and 1.4 million merchants. Edenred offers these services in more than 42 countries around the world, mainly in Europe, and employs at least 8,000 people.

The major competitors of Edenred

If the French group Edenred has been able to rise to the first place in the ranking of transactional solutions providers in the world, it is of course not the only one to offer this type of service on an international scale. So it is wise to know which companies are likely to compete with it. Of course, knowing these competitors is not enough to guide you in taking a position on the Edenred share price. To take advantage of this, you need to integrate the information from these companies into your fundamental analysis, taking into account the results of each company, their respective news and the evolution of their market shares.

Natixis

This financing, management and financial services bank is a subsidiary of the BPCE group resulting from the merger between the Caisse d'Epargne and the Banque Populaire in 2006. It also offers transactional services such as cheques.

Sodexo

Another French company that is overshadowing Edenred. Specialized in collective catering services, this group also offers meal vouchers called "restaurant vouchers".

Chèque Déjeuner

Finally, we can also mention the company Chèque Déjeuner, which issues vouchers of the same name and is one of Edenred's main competitors in Europe.

The major partners of Edenred

As we have quickly seen above, the Edenred group is setting up various partnerships with well-known companies offering services or products, in order to extend the possibilities of using its payment vouchers and transaction services. The more these partnerships are formed, the more interesting its services are for companies and their employees. Here are a few examples of the partnerships recently established by the company:

Europ Assistance

In 2014, Edenred became a partner of the Europ Assistance group by setting up the Ticket Travel Pro offer, which is an all-in-one integrated solution for employees' expenses during business trips. This payment card, combined with an online booking platform and an expense report management area, includes insurance and assistance services offered by the Europ Assistance group.

Midas

In 2017, it is the Midas group that is partnering with the Ticket Travel Pro project as part of its car maintenance and services. The aim of this partnership is to simplify access to the group's vehicle network for company employees.

ProwebCE

Finally, also in 2017, Edenred and ProwebCE partnered with the French group Vente-Privée by setting up an offering that includes management and accounting software packages as well as the Meyclub platform, which allows company employees to use funds granted to them each year by their works council on the merchant site.

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The factors in favour of a rise in the Edenred share price:

To understand how Edenred's share price can evolve over time, it is essential to understand how this company can deal with the challenges it will face in the future. To do this, you need to know the strengths and weaknesses of this company in the face of the competition in its sector of activity, as well as the advantages of this stock in the eyes of investors. Let's go over the details of these strengths and weaknesses of Edenred.

First of all, let's take a moment to review the main advantages that the Edenred group has over its competitors, with the following strengths:

First of all, we can of course underline Edenred's position on the market, which is one of its greatest assets. Indeed, the group is currently and for many years the world leader in service vouchers. It holds more than 30% of the market share and is ahead of its main competitor, Sodexo.
Still among the main assets of the Edenred group, we can of course talk about its long experience in its business sector. Indeed, the group is one of the historical specialists in the employee benefits segment through luncheon vouchers but also other services such as holiday vouchers and other bonuses for employees which represent 79% of the volume of issues. The group has also wisely diversified into other areas such as expense management, motivation with gift vouchers and other vouchers, and social programmes, enabling it to offer a wide range of solutions to its customers and meet all their needs.
Another major advantage of Edenred is its strategic positioning in certain markets. Edenred has strong positions in certain strategic regions, such as Latin America, where it generates half of all billings, including Brazil, which is currently the world's largest market, and Colombia, where it has acquired Big Pass, which accounts for 20% of the local market. Its growth opportunities therefore remain particularly interesting in the more or less long term.
This comparison of Edenred's strengths and weaknesses will also show that the company is currently benefiting from two major growth drivers. These include the increase in the penetration rate, particularly in SMEs, and the management of business expenses, travel and vehicle fleets, also known as Expense Management.
Another strength that the group has over the competition today is the data it holds. Indeed, the group's portfolio of monetizable data is very extensive and this data can be easily resold to affiliates.
Finally, the last asset of the Edenred group concerns the financial aspect. Indeed, the company benefits from recurring cash flows which ensure a very good return to its shareholders with a pay-out of around 96%. This makes the stock a popular and highly sought-after one.

The factors in favour of a drop in the Edenred share price:

As we have just seen, the Edenred group currently has many strengths that should allow it to gain in growth in the future and that can therefore support its stock price. But of course it also has some weaknesses that we propose to discover here in more detail:

In the historical markets in which Edenred operates, such as Europe, the business is increasingly sensitive to the decline in employment. In Europe, this represents 47% of the business. The business is also sensitive to changes in tax legislation and to the impact of lost or expired vouchers on the Group's operating income.
The fact that the Brazilian business still accounts for nearly 50% of the Group's gross operating profit is also a weakness for Edenred, with a strong negative impact on results. In addition, the currencies of other South American countries also have an unfavorable impact, accounting for 50% of issue volumes and more than 60% of EBIT.
Another weak point in this group concerns interest rates in Europe, which have collapsed in recent years, affecting the return on cash holdings of securities in the euro zone.
It should also be noted that the group is indebted in euros, even though a large part of its cash is in emerging currencies.
Finally, the Edenred group suffered some setbacks to its brand image after the French Competition Authority launched an investigation into the meal ticket market.

The information supplied here is only for indicative purposes and should not be used without the completion of a comprehensive and complete fundamental analysis of this asset notably taking into account exterior data, future publications and announcements and all fundamental events and news that could influence the strengths and weaknesses or make them more or less significant. This information does not in any way constitute recommendations relating to the completion of transactions or a solicitation to buy or sell an asset.

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Analysis before buying or selling Edenred shares