Allgeier SE: A Dividend Anchor in the IT Transformation Tide

In an era where tech stocks are often synonymous with volatility, Allgeier SE (FRA:A2GS63) stands out as a rare gem: a German IT services powerhouse delivering a steady 2.76% dividend yield while navigating the choppy waters of digital transformation. With a consistent €0.50 annual dividend since 2023 and a payout ratio held firmly at 19%, the company's financial discipline is unmatched. But is this dividend sustainable? And with earnings showing recent softness, is now the time to buy? Let's dive in.

Earnings: A Temporary Dip, Not a Decline

Allgeier's Q1 2025 results were modest, with revenue slipping to €96 million from €99 million in 2024. The culprit? Delays in public-sector digitalization projects, a temporary hurdle the company attributes to bureaucratic inertia—not a loss of demand. Management remains confident: “Federal budgets will accelerate in H2, unlocking pent-up demand,” they noted in their May 15 interim report.

Crucially, adjusted EBITDA margins held steady at 10%, and the company reaffirmed its full-year guidance. While Q1 net income dipped to a €0.8 million loss (vs. a €0.18 million loss in 2024), this is a blip in a longer story of growth. Full-year 2024 sales hit €403 million, and the adjusted EPS of €0.89—though down from 2023—reflects a company prioritizing strategic investments over short-term gains.

Dividend: A Fortress of Stability

Allgeier's dividend history is a model of consistency. Since 2023, shareholders have enjoyed a steady €0.50 per share payout, yielding 2.76% at current prices. The Total Payout Ratio—a metric encompassing dividends and buybacks relative to net income—has been kept at a conservative 19% in 2024, even as the company invested in expanding its 48-country footprint.

Despite Q1's net loss, the payout ratio dipped to 0%, but this is temporary. With H2's expected rebound, the dividend remains safe. Compare this to peers in IT services, where payout ratios often exceed 50%, leaving dividends vulnerable to earnings shocks. Allgeier's approach is a masterclass in prudence.

Valuation: A Hidden Bargain in Tech

At current prices, Allgeier trades at just 6.5x its 2024 EPS of €0.89—a stark contrast to the sector's average P/E of 18. Even if 2025 EPS flattens, the yield remains compelling. Meanwhile, its net debt of €138 million is manageable, with €40 million in cash and a strong balance sheet.

The company's role as a leading IT services provider (ranked #1 on Germany's Lünendonk® List 2024) isn't just a title. With over 3,100 employees and a focus on high-margin digital transformation projects, Allgeier is positioned to capitalize on a secular shift. Governments and enterprises worldwide are pouring money into tech upgrades—a trend that won't reverse.

Why Act Now?

The market is pricing in Q1's softness, but not the H2 recovery. With the dividend yield at 2.76% and a P/E half the sector's average, Allgeier offers income with growth upside. The June 30 ex-dividend date is a clear catalyst: investors buying now lock in the 2025 dividend.

Final Verdict

Allgeier SE isn't a flashy growth stock. It's the dividend stalwart of the digital age—stable, predictable, and underappreciated. With earnings poised to rebound, a fortress balance sheet, and a payout ratio that leaves room for growth, this is a buy for income investors seeking safety in a turbulent market.

The ex-dividend date on June 30 is your signal: act now to secure a dividend yield of nearly 3% while positioning yourself for the IT transformation boom. Allgeier isn't just surviving—it's building a moat for the next decade.

Allgeier's dividend history and stock performance data sourced from GuruFocus and interim reports. P/E calculations based on 2024 EPS figures.