Enento Q2'25: No major cause for celebration

Translation: Original published in Finnish on 7/16/2025 at 8:00 am EEST.

Enento's Q2 result fell short of our forecasts. The outlook shows signs of stabilization, but no real signs of recovery are yet visible. We believe this is also signaled by the removal of the timeframe for the financial targets. In our view, the share price factors in clear earnings growth for the coming years (2025e-2026e adj. P/E 20x-14x), and if this does not materialize, the expected return will largely depend on the dividend. Following minor estimate cuts, we lower our target price to EUR 17.0 (was EUR 17.5) and reiterate our Reduce recommendation. 

Q2 result missed expectations

Enento's Q2 revenue grew modestly by 0.5% to 38.6 MEUR, marginally exceeding our forecast of 38.1 MEUR. Revenue was slightly supported by currencies, and at comparable exchange rates, it declined by 1.7%. Development by business area was largely in line with expectations. Business Insight's revenue was flat year-on-year on a comparable basis, and Consumer Insight's revenue decreased by 4%. The latter's development was still hampered by weak demand for consumer credit information services, especially in Sweden, although some signs of stabilization in their demand are discernible. The development of Business Insight was limited by, among other things, one-off deals timed to the comparison period, but new product areas, such as compliance services, continued to show good growth according to the company. Enento's adjusted EBIT in Q2 was 10.2 MEUR, falling short of our 10.5 MEUR preview estimate. Profitability was pressured by, among other things, increased data acquisition costs, marketing investments, and lower capitalization of own work due to IT infrastructure consolidation. Reported earnings figures were even further below our estimates, with reported EBIT coming in at 5.0 MEUR (estimate 6.7 MEUR) due to significant one-off costs (3.2 MEUR). Once the IT infrastructure project is completed, these should decrease, but some will still be recorded in Q3.

Updated financial targets

Enento reiterated as expected its guidance for revenue of 150-156 MEUR and adjusted EBITDA of 50-55 MEUR. The guidance is achievable, but especially regarding the EBITDA, we believe the lower end of the range is more likely. Should the operating environment deteriorate, a negative earnings warning would not be entirely ruled out. However, this is not currently visible, but on the other hand, there are no clear signs of recovery either, at least in the short term. In our view, this is also reflected by the update of the company's financial targets (average growth of 5-10%, adjusted EBITDA margin of 40%, and net debt to adjusted EBITDA below 3x). The targets were reiterated, but the target period was removed, as the company assumes that achieving them will take longer than previously expected. We believe the targets are ambitious and not achievable at least within a couple of years. In any case, achieving them would require a clear macroeconomic recovery.

We do not see the stock as particularly attractive

Enento's adjusted EV/EBIT multiples for 2025-2026 are 14x-13x and the corresponding P/E multiples are 20x-14x. This year's multiples are not yet particularly attractive, but EPS is still depressed by significant non-recurring items in the first half of the year (not adjusted in the P/E ratio), and these should decrease towards the end of the year. Next year's multiples are already moderate, but we do not see much upside in them and we think that the expected return is mainly based on a dividend yield of around 6%. Our DCF model, which expects very clear improvement in cash flow over the next few years, indicates only limited upside for the stock (EUR 18.1). We believe the company has the potential to return to steady earnings growth after difficult years, but regulatory changes in the Swedish market continue to create uncertainty in the short- and possibly also medium-term outlook. Overall, we view the risk/reward ratio at the current valuation as quite neutral.