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

Created Date: Friday May 05, 2017 14:40:58
Last Updated Date: Friday May 05, 2017 14:40:58
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