Enento Q1'25 preview: Uncertainty is also reflected in the price

Translation: Original published in Finnish on 4/15/2025 at 8:00 am EEST.

Enento will report its Q1 results on Friday, April 25 at 12.00 noon EEST. We expect revenue on par with the comparison period and slightly weakening operating profit. We have made marginal cuts to our forecasts for the coming years due to increased economic uncertainty following the trade war. Due to this and our slightly increased required return, we are cutting our target price to EUR 16.5 (was EUR 17.0) but raising our recommendation to Accumulate (was Reduce) as a result of the decreased valuation. 

No significant change in the market environment in the beginning of the year

We expect Enento's Q1 revenue to have remained largely stable at 37.2 MEUR. Since the beginning of the year, there has been no significant change in the market environment in the company's largest markets, Finland and Sweden. Segment-wise, we believe the situation remains unchanged. Consumer Insight's development has been weak due to weak demand for consumer credit information services in both Sweden and Finland. In Sweden, development is being weighed down by a structural change in the broker channel, and outside of this, we estimate that a slight recovery will continue in line with the Q4'24 trend. We estimate that Business Insight's development has continued in line with the trends of previous quarters, clearly stronger (especially in Finland), e.g., due to new product launches. Some of the new product areas operate on a recurring revenue model, and thus their impact on growth in the short term is limited.

Still no prerequisites for earnings growth

We expect Enento's adjusted Q1 EBIT to have weakened slightly year-on-year to 8.8 MEUR (Q1'24: 9.4 MEUR), which would translate into an adjusted EBIT margin of 23.6% (Q1'24: 25.1%). With our revenue forecast at the same level as last year, we expect the company to face significant cost inflation. We believe this was due to factors such as higher material acquisition costs (which put pressure on gross margins), increased marketing efforts for new products and moderate wage inflation. At the same time, the efficiency program completed earlier last year will deliver some savings, but on balance we expect cost pressures to slightly exceed savings. The company has signaled that it is constantly looking for new efficiency targets but does not have an actual new savings program in place. To return to earnings growth, the company needs to get revenue back to growth that exceeds cost inflation.

Uncertainties aplenty

The trade war initiated by the United States has no direct impact on Enento, but the uncertainty it causes and the possible prolongation of the recession in Finland and Sweden may indirectly affect the company. In connection with the update, we have made moderate negative forecast revisions and raised our required return (WACC 8.0% -> 8.5%) due to increased forecasting risks. However, our 2025 forecasts are in line with the company's guidance (revenue of 150-156 MEUR & adj. EBITDA of 50-55 MEUR). We expect the company's revenue to grow by 1% to 151.8 MEUR and adjusted EBITDA to be 51.9 MEUR. The biggest variables for this year's development are the change in the business model for Swedish SME customers and the development of the credit market, for which we expect an update in connection with the Q1 result after the regulatory changes that came into effect at the beginning of March.

The risk/reward ratio has become attractive

Enento's adjusted EV/EBIT multiples for 2025-2026 are below 13x-12x and the corresponding P/E multiples are 16x-13x. The valuation levels are moderate as earnings are expected to turn to growth in our forecasts this year, albeit partly only due to lower financing expenses. We still expect softness in the short term, but in our view, the risk/reward ratio is already turning attractive at the current valuation for patient investors.