170419 Arcadis | from most beloved to least liked 170419 Arcadis | from most beloved to least liked

No. pages 24

Back in the old days, Arcadis always had the support of the financial analysts. The vast majority of these analysts had a 'Buy' rating on the stock whilst analysts with a 'Sell' rating were hard to find. Today, there is no analyst out of ten who cover the stock which recommends investors positive on this company. In less than two years the consensus opinions on the Arcadis shares went from most beloved to least liked.

In these past couple of years the company's financial performance disappointed analysts and investors more than once. The poor performance is not related to dramatically changed market demand or circumstances or unqualified workforce, missing skill sets or whatever, no, it had all to do with wrong decisions and wrong set of priorities by its management board.

As a result Arcadis CEO McArthur was ousted and its CFO Renier Vree was appointed interim CEO. From the Supervisory Board he was assigned to simplify the organization and to align the cost structure to the new market realities. In a sense his task was more or less to unwind the global leadership model. Focus should be on winning work from its clients.

In this report we will revisit its financial targets which the company presented at its Capital Market Day at the end of 2013. The outcomes of each of these goals are discussed and compared to its peers when possible.

After having looked back we will present our mid-term outlook for Arcadis. We will provide our views on the company's revenue, operating profit growth and free cash flow for the medium term. On basis
of this, we will present our financial outlook for the company.

This outcome will result in amongst other valuation multiples which shall be compared to its peers and a target price based on our DCF model.

Lastly we have drawn our conclusions and investment opinion.


1      introduction
2      Arcadis at a glance
3      financial targets for 2014-2016 period
3.1   revenue growth
3.2   operating margin target
3.3   free cash flow
3.4   Return on Invested Capital
3.5   conclusions
4      earnings estimate for 2017-2019 period
5      DCF model
6      Arcadis valuation multiples compared to its peer group
7      summary and conclusions
8      appendix

171205 Arcadis | from least liked to … 171205 Arcadis | from least liked to …

No. pages 18

In the Spring of this year we were - among - the first in the market to turn positive on Arcadis. In an in-depth report called 'from most beloved to least liked' we argued why. At that moment we labelled Arcadis a highly attractive investment case because;

> firstly - and most importantly - the shares traded sharply below its fair value according to us,
> at that moment there was not a single analyst with a positive stance on this company and
> we foresaw that when organic growth would start to turn positive again, this could be a trigger for other to upgrade their views.

Since the release of our report the share price has advanced by some 30%.

Besides a lot has happen of which the most important milestones were;

> the appointment of Peter Oosterveer as new CEO,
> the strategic review of CallisonRTKL,
> the return to positive organic net revenue growth and
> the presentation of its strategy 'Creating A Sustainable Future'.

In this report we will discuss Arcadis' updated strategy and its new framework of financial targets which were presented at its Capital Markets Day. Thereafter we will compare our mid-term outlook with the company's financial guidance. If and when necessary our outlook estimates will be adjusted accordingly.

Lastly we will draw our conclusions and investment opinion.


     executive summary
1   introduction
2   Arcadis at a glance
3   ‘Creating A Sustainable Future’
4   organic revenue growth
5   operating margin
6   net working capital and DSO
7   return on invested capital
8   leverage ratio
9   DCF model
10 CallisonRTKL
11 summary and conclusions

180328 Arcadis | opportunity for buy-side investors 180328 Arcadis | opportunity for buy-side investors

No. pages 9

In these past couple of days Arcadis' shares lost approx. 15% to a level of EUR 14.75 per share on the back of a research report by ABN Amro. One of its analysts argued that the market underestimates the company's risk profile. Neither Arcadis nor ourselves disagrees that there is ample room for improvement but we believe that certain elements are put in the wrong perspective and risks are overstated. We also believe it is biased; the report only focuses on the lesser side of Arcadis. Since Mr. Oosterveer became CEO Arcadis started to blossom again. And according to us the initiatives implemented have not reached maturity yet.

In this note we share our thoughts about the arguments made. Lastly we will draw our conclusions and investment opinion.


Arcadis Logos Energia
Working Capital
Restricted cash

190410 Arcadis | 2018 free cash flow was not a fluke 190410 Arcadis | 2018 free cash flow was not a fluke

No. pages 22
On basis of the results, its earnings outlook and valuation multiples one had expected that the share price of Arcadis would have relayed to higher levels. However, the investment community remains somewhat sceptical whether or not the improvement in free cash flow generation was an one-time event. We admit that the company's free cash flow was inflated by an unusual high inflow of other working capital but even adjusted for that item, we believe that its free cash flow will remain at least at virtually the current level and will mark the start for new highs.

1   introduction
2   Arcadis at a glance
3   ample room for improvement across the board
4   financial KPIs for the key markets
5   financial KPIs for the improvement areas
6   financial KPIs for Arcadis 
7   Arcadis Logos Energia
8   valuation multiples
9   fair value assessment
10 summary and conclusions


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