Securitas AB shares fell 3.42% to SEK149.60 on Tuesday after the Swedish security services provider published a strategic roadmap to 2030 that includes an ambitious earnings-per-share (EPS) target. The company said it aims for a 10% average annual EPS gain on a constant-currency basis over a business cycle, a goal that has prompted scrutiny from analysts over how much must come from organic performance versus capital deployment.
The Stockholm-listed firm, which has a market capitalisation of SEK90 billion, paired the EPS ambition with several other financial targets. Management set an operating cash flow goal of 80-90% of operating income before amortisation, a cap on net debt-to-EBITDA of below 2.5 times, and a dividend policy targeting 50-60% of annual net income. Securitas also reaffirmed a long-term operating margin ambition of above 10%.
Jefferies, which carries an "underperform" rating on the stock and a SEK130 price target, said current assumptions for organic growth and margins equate to around 5% EPS growth. "The market may need to build confidence on organic acceleration, otherwise more than half of the target will need to come from M&A/buybacks," Jefferies analysts said. The broker's note showed its consensus estimate at roughly 8%.
Alongside the new targets, Securitas tightened a prior cash conversion aim - narrowing it from a previous 70-80% range to the newly stated 80-90% - and reduced its leverage ceiling from below 3.0 times net debt-to-EBITDA to below 2.5 times. The company also included language that excess capital would be returned to shareholders once strategic growth priorities were met, a change Jefferies said increases the likelihood of share buybacks.
In a statement accompanying the strategy release, President and Chief Executive Magnus Ahlqvist said: "Today, we are setting a clear direction for Securitas towards 2030, strengthening our position as a trusted partner in intelligence-led security." He added: "With updated financial targets and a strong focus on quality, innovation and cash generation, we are accelerating our transformation and are confident in our ability to drive sustainable earnings growth and long-term shareholder value."
The market reaction to the targets reflected investor caution about the pace of organic improvement needed to meet the 10% EPS objective. Jefferies' view that roughly half the target would require external capital actions - M&A or buybacks - underpinned its continued "underperform" stance and lower price target relative to the stock's closing level on Tuesday.
Summary
Securitas set a 2030 strategic plan with a 10% average annual EPS target and tightened cash conversion and leverage goals. Jefferies says current organic expectations cover only about half the EPS target, implying acquisitions or buybacks would be needed to reach the full ambition. Shares fell more than 3% on the announcement.