Analyzing Havas N.V.'s Strong Fundamentals and Earnings Growth

Havas N.V.'s stock has risen by 4.8% over the past three months. The company's ROE, which measures profitability in relation to shareholder equity, is 11%. This is similar to the industry average, but Havas' earnings growth of 8.6% over the past five years is lower than the industry average of 18%. The investor should consider if the expected growth or decline in earnings is priced in the stock.

Havas N.V.'s stock has experienced a notable increase of 4.8% over the past three months. The company's Return on Equity (ROE), which measures profitability relative to shareholder equity, stands at 11%, aligning with the industry average. However, Havas' earnings growth over the past five years has been relatively subdued at 8.6%, compared to the industry average of 18%.

Financial Performance and Guidance

Havas reported its first-half 2025 results, which were broadly in line with expectations. The company achieved 2.6% organic growth in the second quarter, slightly above analyst estimates [1]. Management maintained its full-year 2025 guidance, targeting organic growth of more than 2% and an EBITA margin between 12.5% and 13.5% [1]. The company also announced a share buyback program of approximately 3%, which is expected to boost earnings per share growth [1].

Growth and Margin Improvements

Havas offers the highest EBITA growth rate among its peers, with a 6.5% compound annual growth rate compared to 4.1-6.0% for competitors [1]. The company aims to achieve a 2028 margin target of 14.0-15.0% from a relatively low base. With the newly announced buyback program, Havas is projected to achieve low double-digit EPS growth, based on 2.5% organic growth, 1.5% growth from mergers and acquisitions, and meeting its 2028 margin targets [1].

Valuation and Market Perception

Havas currently trades at approximately 7 times its 2025 estimated price-to-earnings ratio, which some analysts consider undervalued both on an absolute basis and relative to peers, even accounting for the 7% historical average P/E discount observed from 2009 to 2017 [1].

Conclusion

Investors should consider whether the expected growth or decline in earnings is priced into Havas' stock. While the company's ROE and margin targets suggest potential for improvement, the slower earnings growth compared to the industry average may warrant a closer examination of its valuation and growth prospects.

References

[1] https://uk.investing.com/news/earnings/havas-reports-inline-1h25-results-maintains-guidance-announces-buyback-93CH-4190790