AHEXF - Adecco: Facing Threats To Its Market Position
2024-02-05 23:09:34 ET
Summary
- Adecco is a market leader in the recruitment industry with a strong brand and a wide range of services.
- Technological development is eroding Adecco's competitive advantages, with the likes of LinkedIn contributing to higher competition.
- The Company's financial performance is underwhelming, with low margins and growth. The acquisition of AKKA has the potential to improve this, but we are skeptical.
- Adecco has surprised us with its 9M performance, implying market share growth and resilience in what is an incredibly difficult macroeconomic environment.
- The industry is facing some headwinds and tailwinds but, overarchingly, is not positioned to achieve growth beyond what has already been achieved.
Investment thesis
Our current investment thesis is:
- Adecco is a market leader in the recruitment industry, with a wide range of services provided and a strong brand across key geographies.
- The business benefits strongly from the network effect, although technological development is reducing the company's value from this, eroding its competitive advantages.
- Expanding its consulting capabilities looks to be a good step, but with growth already slowing, we are unsure how material the impact will be from this.
- The business has underwhelming financials, and when compared to peers, Adecco is underperforming.