Breaking Down ALSO Holding AG Financial Health: Key Insights for Investors

Understanding ALSO Holding AG Revenue Streams

Understanding ALSO Holding AG’s Revenue Streams

ALSO Holding AG has demonstrated a robust financial performance, with its revenue streams originating from various segments, including IT products, services, and regional markets. The company’s diverse portfolio contributes to its overall financial stability and growth.

Revenue Breakdown

In 2022, ALSO Holding AG achieved a total revenue of €3.38 billion, up from €3.1 billion in 2021. This reflects a year-over-year growth rate of approximately 8.7%.

• Products: The product segment accounted for approximately 70% of the total revenue, translating to about €2.366 billion.
• Services: Services contributed around 30%, equating to €1.014 billion.

Regional Revenue Contributions

Region-wise, the revenue distribution in 2022 is as follows:

Year-over-Year Revenue Growth Rate

Analyzing historical trends, the year-over-year revenue growth rates are highlighted below:

Contribution of Business Segments

The contributions from business segments indicate a shift in consumer behavior and market conditions:

• IT Products: Increased demand in digitalization led to significant growth, with a contribution increase of about 10%.
• Services: Extended service offerings resulted in a growth of 6% in this segment.

Significant Changes in Revenue Streams

In recent years, ALSO has witnessed notable changes in its revenue streams, largely driven by:

• The rising demand for cloud services, which has contributed to service revenue growth.
• A steady decline in traditional IT hardware sales, prompting a strategic shift towards more value-added services.

A Deep Dive into ALSO Holding AG Profitability

Profitability Metrics

ALSO Holding AG has shown a significant financial performance in recent years, which can be measured through various profitability metrics including gross profit, operating profit, and net profit margins.

For the fiscal year 2022, the company reported a gross profit of €145 million, reflecting a gross margin of 15.5%. This is a slight increase from the previous year's gross profit of €140 million and a gross margin of 14.9%.

In terms of operating profit, ALSO Holding AG recorded an operating profit of €35 million in 2022, resulting in an operating margin of 3.7%. This is an improvement from the operating profit of €32 million and an operating margin of 3.5% in 2021.

The net profit for the company in 2022 was reported at €28 million, leading to a net profit margin of 2.9%. This is consistent with the net profit of €26 million and a net profit margin of 2.7% in 2021.

Below is a table summarizing the profitability metrics for ALSO Holding AG over the past two years:

When comparing these profitability ratios with industry averages, the technology distribution industry has a typical gross margin of around 12%, indicating that ALSO Holding AG is performing above average in this area. The operating margin average within the sector hovers around 3%, positioning ALSO fairly competitively. Finally, the net profit margin for the industry averages close to 2%, which suggests that ALSO Holding AG's profitability metrics indicate solid management and operational strategies.

Looking at the trends in profitability over time, the consistent growth in gross and operating profits suggests effective cost management strategies have been implemented. The increase in gross margins, from 14.9% in 2021 to 15.5% in 2022, underscores the company's ability to enhance operational efficiency. This might be attributed to strategic pricing and careful selection of product offerings that align with market demands.

Moreover, the company's focus on improving operational efficiency continues to reflect positively in its financial metrics, indicating a strong long-term outlook for investors. The trends in profitability, combined with favorable comparisons to industry averages, exhibit that ALSO Holding AG maintains a robust financial health that is appealing to potential investors.

Debt vs. Equity: How ALSO Holding AG Finances Its Growth

Debt vs. Equity Structure

ALSO Holding AG has established a balanced approach to financing its growth through strategic use of both debt and equity. As of the latest financial reports, the company’s total long-term debt stands at €73 million, while short-term debt is approximately €12 million, giving a total debt of €85 million.

The debt-to-equity ratio (D/E) of ALSO Holding AG is currently at 0.36, indicating a conservative leverage position. This ratio is below the industry average of 0.5, reflecting the company’s prudent debt management strategy. This lower ratio suggests that the company has less reliance on borrowed funds compared to its equity base, which is a positive signal for investors focused on financial stability.

In recent months, ALSO Holding AG engaged in refinancing activities aimed at optimizing its capital structure. Notably, the company issued €30 million in bonds in March 2023, which were rated Baa1 by Moody's, reinforcing investor confidence in its creditworthiness. The successful bonds issuance not only enhanced liquidity but also allowed the company to take advantage of favorable interest rates.

ALSO Holding AG balances its financing strategy by maintaining a disciplined approach towards both debt and equity funding. The company's equity base, at the end of fiscal 2023, was reported to be approximately €236 million. The firm's ability to generate cash flow from operations, which amounted to €60 million in the same period, further supports its capacity to service existing debt and invest in future growth opportunities.

Assessing ALSO Holding AG Liquidity

Liquidity and Solvency

Assessing the liquidity of ALSO Holding AG, we begin with the current and quick ratios. As of the latest financial report, the company's current ratio stands at 1.55. This indicates that for every euro of current liabilities, the company has €1.55 in current assets. The quick ratio, which excludes inventory from current assets, is reported at 1.21, suggesting that even without liquidating inventory, the company can cover its short-term obligations comfortably.

Next, we analyze the trends in working capital. The working capital for ALSO Holding AG is currently at €227 million, highlighting a solid buffer to meet operational needs. Over the past year, working capital has increased by 10%, reflecting effective management of receivables and payables.

In examining the cash flow statements, we delve into the operating, investing, and financing cash flow trends:

The operating cash flow of €50 million shows a robust increase of 11.11% from the previous year, indicating strong profitability and efficient operations. However, the investing cash flow trend reflects an increase in outflows, now at (€20 million), signifying a rise in capital expenditures. The financing cash flow has notably shifted to €5 million, a substantial recovery from a negative outflow of (€2 million), indicating stronger financing activities.

As for potential liquidity concerns, it’s notable that while the current and quick ratios are above industry averages, management should remain cautious regarding the increasing investing cash flows that could impact overall liquidity. Nevertheless, the improvement in operating cash flow signifies a strong foundation for maintaining liquidity in the near term.

Is ALSO Holding AG Overvalued or Undervalued?

Valuation Analysis

Assessing the financial health of ALSO Holding AG involves a detailed examination of various valuation metrics. This analysis will focus on essential ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA), alongside stock price trends, dividend yield, and analyst consensus.

Price-to-Earnings Ratio (P/E)

As of October 2023, ALSO Holding AG has a P/E ratio of 18.5. This indicates how much investors are willing to pay per euro of earnings. For comparison, the industry average P/E ratio stands around 20.

Price-to-Book Ratio (P/B)

The current P/B ratio for ALSO Holding AG is 2.5, which is relatively close to the industry average of 2.7. This suggests that the market is valuing the company slightly lower than its peers based on book value.

Enterprise Value-to-EBITDA (EV/EBITDA)

The EV/EBITDA ratio for ALSO Holding AG is currently 10.2. This metric is crucial for understanding valuation relative to earnings before interest, taxes, depreciation, and amortization and compares favorably to the industry benchmark of 11.0.

Stock Price Trends

Over the past 12 months, ALSO Holding AG has experienced a stock price increase from approximately €68 to €80, reflecting a growth of around 17.6%. This upward trend is noteworthy considering the broader market fluctuations during the same period.

Dividend Yield and Payout Ratios

Currently, the dividend yield for ALSO Holding AG is 2.4%, with a payout ratio of 40%. This indicates a stable approach to returning value to shareholders while retaining funds for growth and expansion.

Analyst Consensus

According to the latest analyst reports, the consensus rating for ALSO Holding AG is Buy, with an average price target of €85. Analysts believe the company has strong growth potential in its sector.

Key Risks Facing ALSO Holding AG

Risk Factors

ALSO Holding AG faces a variety of internal and external risks that could impact its financial health and performance. Understanding these risks is essential for investors assessing the company's long-term viability.

Key Risks Facing ALSO Holding AG

One major internal risk is personnel management, particularly in the context of retaining skilled workers in a highly competitive job market. The company's ability to attract and retain talent has a direct bearing on operational efficiency. Externally, the global supply chain disruptions have posed significant challenges, leading to increased costs and delays. Additionally, the shifting regulatory landscape across European markets can impose compliance costs that affect profitability.

Operational risks include dependencies on certain key suppliers and fluctuations in demand for technology products. The technology distribution sector is characterized by intense competition. Major competitors, such as Tech Data and Ingram Micro, have also been expanding their service offerings, which could dilute market share for ALSO Holding AG.

Financial and Strategic Risks

In its latest earnings report, ALSO noted a drop in EBITDA margin to 3.5% from 4.1% year-over-year, signaling potential financial strain amidst rising operational costs. The company's net sales for the first half of 2023 reached €1.9 billion, which is 10% lower compared to the same period in 2022. This decline raises concerns about revenue generation stability amidst fluctuating market conditions.

ALSO's strategic risk stems from its rapid expansion efforts; the integration of acquired companies may present challenges that can affect overall performance. Furthermore, currency fluctuations can impact revenues derived from international operations, particularly with a significant presence in various European countries.

Mitigation Strategies

ALSO Holding AG has implemented several strategies to mitigate these risks. The company is diversifying its supplier base to reduce dependency on a limited number of suppliers. Additionally, it has invested in employee training programs to enhance talent retention. Financially, the firm is focusing on cost control measures in response to rising expenses, highlighting a commitment to maintaining operational efficiency.

By addressing these risks head-on, ALSO Holding AG aims to not only safeguard its current operations but also position itself for future growth despite prevailing market challenges.

Future Growth Prospects for ALSO Holding AG

Growth Opportunities

ALSO Holding AG, a prominent player in the technology sector, has been strategically positioning itself to leverage multiple growth opportunities. The company’s focus on product innovations, market expansions, acquisitions, and partnerships is pivotal for its future growth trajectory.

Key Growth Drivers

ALSO has identified several key drivers that are anticipated to enhance its growth journey:

• Product Innovations: The company has invested significantly in the development of cloud services and digital solutions. In 2022, ALSO launched a new cloud platform that reportedly increased its cloud services revenue by 45%.
• Market Expansions: ALSO has expanded into emerging markets in Eastern Europe and the Nordic region, accounting for a 20% increase in revenue from these areas in the last fiscal year.
• Acquisitions: In 2021, ALSO acquired a leading IT distribution company in Italy for €80 million, which has since contributed approximately €30 million to annual revenue.
• Strategic Partnerships: Partnerships with major technology vendors, including Microsoft and Cisco, have strengthened ALSO's market position, resulting in a 25% growth in service offerings.

Future Revenue Growth Projections

Analysts project that ALSO Holding AG's total revenue will grow from €2.4 billion in 2022 to approximately €3 billion by 2025, reflecting a compound annual growth rate (CAGR) of 10.5%.

Earnings Estimates

For the fiscal year 2023, earnings before interest and taxes (EBIT) are expected to rise to €120 million, up from €100 million in 2022. Earnings per share (EPS) estimates suggest an increase to €3.50 by the end of 2023.

Strategic Initiatives and Partnerships

ALSO has outlined several strategic initiatives that are likely to drive growth:

• Expansion of e-commerce capabilities, aiming for a 30% increase in online sales by 2024.
• Investing in sustainability initiatives, with a target to reduce carbon emissions by 50% by 2030, improving brand position and attracting environmentally conscious consumers.
• Strengthening its cybersecurity offerings in response to increasing demand, targeting a growth of 15% in this service area over the next two years.

Competitive Advantages

ALSO Holding AG's competitive advantages include:

• A strong distribution network with over 150,000 active customers across Europe.
• Expertise in logistics and supply chain management, reducing lead times and enhancing customer satisfaction.
• A diverse range of products and services, allowing for cross-selling opportunities that enhance customer retention rates.

The combination of these factors positions ALSO favorably for sustained growth, highlighting its proactive approach to capitalizing on market opportunities and navigating challenges effectively.