Disclaimer 1: None of the following should be construed as financial advice. The author of this post has virtually no financial experience nor direct links with Atos, nor any actor involved with the company or in recent controversies. All information the author will share has been retrieved through publicly available documents and platforms, all of which are online. Further, such information may simply be wrong or wrongly reported from the author. The author should be thought of as an ignorant, uninformed and very limited teenager.
Disclaimer 2: The author of this post owns Atos shares.
Disclaimer 3: None of the questions posed by the author wants to solicit the sharing of confidential or otherwise non publicly available information.
Is the company not significantly undervalued?
Atos made it to the edges of my watchlist a couple of years ago, but only recently have I started paying attention to the company, which has eventually brought me to buy some shares.
I understand that the past couple of years have been tremendously bad, in terms of uncertainty, lack of clarity and transparency from management and just in terms of the sheer amount of cash that has been burnt.
Nonetheless, I still feel that the current valuation reflects a very pessimistic outlook on the company. Dumbing it down, as of today, assuming net debt to be €3,35B (they recently confirmed guidance of annual Free Cash Flow of about -€1B) the Enterprise Value of the company stands at just above €4B. Compared with a stable revenue of €11B and a track record that shows that the business can be profitable (e.g. avg net income between 2016 and 2020 greater than €550mln), the company appears undervalued, at least in the face of these ratios.
Further (here very much out of my depth y'all can help me out with much more knowledge), if we look at rumoured valuation of specific units... if we account for €1.5B for BDS, would it be that outlandish to state that a valuation on the lower end for Digital might be €2.5B? Don't you have right there already the €4B of EV without even touching TFCo and a number of smaller Eviden units?
Comparatively the valuation also seems attractive e.g. Kyndril (resulting from the recent IBM spinoff).
If we add on top of that the fact that the company is involved in strategic activities that I imagine the French government (yes, granted only limited part of business) would much rather nationalise before seeing it negotiated bankruptcy court. Wasn't the last chunk of EDF nationalised with something like a 50% premium on the stock price?
Question 1: what am I not seeing?
Question 2: what mistakes am I making?
Question 3: does any of you have a clear idea of the units that make up Eviden and what share of turnover, employees and so forth is attributable to them?
Disclaimer 2: The author of this post owns Atos shares.
Disclaimer 3: None of the questions posed by the author wants to solicit the sharing of confidential or otherwise non publicly available information.
Is the company not significantly undervalued?
Atos made it to the edges of my watchlist a couple of years ago, but only recently have I started paying attention to the company, which has eventually brought me to buy some shares.
I understand that the past couple of years have been tremendously bad, in terms of uncertainty, lack of clarity and transparency from management and just in terms of the sheer amount of cash that has been burnt.
Nonetheless, I still feel that the current valuation reflects a very pessimistic outlook on the company. Dumbing it down, as of today, assuming net debt to be €3,35B (they recently confirmed guidance of annual Free Cash Flow of about -€1B) the Enterprise Value of the company stands at just above €4B. Compared with a stable revenue of €11B and a track record that shows that the business can be profitable (e.g. avg net income between 2016 and 2020 greater than €550mln), the company appears undervalued, at least in the face of these ratios.
Further (here very much out of my depth y'all can help me out with much more knowledge), if we look at rumoured valuation of specific units... if we account for €1.5B for BDS, would it be that outlandish to state that a valuation on the lower end for Digital might be €2.5B? Don't you have right there already the €4B of EV without even touching TFCo and a number of smaller Eviden units?
Comparatively the valuation also seems attractive e.g. Kyndril (resulting from the recent IBM spinoff).
If we add on top of that the fact that the company is involved in strategic activities that I imagine the French government (yes, granted only limited part of business) would much rather nationalise before seeing it negotiated bankruptcy court. Wasn't the last chunk of EDF nationalised with something like a 50% premium on the stock price?
Question 1: what am I not seeing?
Question 2: what mistakes am I making?
Question 3: does any of you have a clear idea of the units that make up Eviden and what share of turnover, employees and so forth is attributable to them?
