Teleperformance SE's Buybacks and ESG Commitment Signal Strong Growth Ahead

Teleperformance SE (TP), a global leader in digital business process outsourcing (BPO), has reinforced its commitment to shareholder value creation with its latest share buyback program. Launched on June 23, 2025, the €100 million initiative not only underscores the company's financial confidence but also aligns with its robust ESG profile, positioning it as a compelling investment for long-term growth.

Strategic Capital Allocation: Buybacks as a Shareholder-Friendly Move

Teleperformance's June 2025 buyback program, which runs through November 5, 2025, represents a continuation of its capital allocation strategy to enhance shareholder value. Shares repurchased during this period will be canceled, directly reducing the outstanding share count and boosting earnings per share (EPS). This initiative is part of a broader €500 million authorization approved by shareholders in May 2024, aimed at addressing dilution from acquisitions like Majorel (2023) and ZP (2025).

The recent buybacks, including those conducted between June 23–27, 2025, are also tied to covering performance share plans. Earlier transactions in 2025—such as purchases totaling 49,720 shares in March and April at an average price of €89.57—demonstrate the company's disciplined execution of this strategy. By canceling shares, Teleperformance aims to reverse dilution and improve EPS by 2-3% in 2025, a critical metric for long-term investors.

ESG Leadership: A Sustained Competitive Advantage

Teleperformance's ESG commitments further strengthen its investment case. The company has been included in prominent ESG indices since 2022, including the CAC 40 ESG and FTSE4Good, reflecting its focus on sustainability and governance. Key initiatives include:
- AI-Driven Transformation: Investments in AI platforms like Ema and Parloa aim to enhance operational efficiency and reduce carbon footprints.
- Workforce Development: Over 62,000 AI/EI training sessions completed by March 2025 underscore its commitment to employee resilience, a core ESG pillar.
- Diverse Revenue Streams: Growth in high-margin sectors like healthcare and fintech mitigates reliance on any single client, aligning with ESG risk management principles.

These efforts not only align with global ESG trends but also create a moat against competitors, ensuring Teleperformance's long-term relevance in a digitizing economy.

Financial Fortitude: A Foundation for Sustained Growth

Teleperformance's financial health provides a solid base for its buyback ambitions. In 2024, the company reported €10.28 billion in revenue and €523 million in net profit, with a net debt/EBITDA ratio of 1.05x, indicating strong liquidity. Management reaffirmed its €1 billion net free cash flow target for 2025, supported by operational efficiencies and disciplined capital allocation.

Despite its financial strength, Teleperformance's stock trades at a P/E ratio of ~22x, below the industry average of 25-30x. This valuation gap, combined with a dividend yield of ~5.5%, makes the stock attractively priced for income-oriented investors.

Why Investors Should Consider Teleperformance Now

Teleperformance's buyback program and ESG integration create a compelling investment thesis:
1. Shareholder-Friendly Strategy: Canceling shares reduces dilution and boosts EPS, directly benefiting long-term investors.
2. ESG-Driven Demand: Institutional investors increasingly prioritize companies in ESG indices, driving sustained demand for Teleperformance's stock.
3. Undervalued Valuation: With a dividend yield of 5.5% and a P/E discount to peers, the stock offers both income and growth potential.

Risks to Consider

While Teleperformance's strategy is sound, investors should monitor:
- Currency Fluctuations: Over 60% of revenue comes from non-Euro regions, exposing the company to exchange rate risks.
- Client Concentration: Reducing reliance on large clients like telecom firms remains a priority.

Conclusion: A Buy for the Long Term

Teleperformance SE's June buyback program and ESG leadership position it as a standout opportunity in the BPO sector. With a strong financial foundation, disciplined capital allocation, and alignment with global sustainability trends, the company is well-equipped to deliver sustained returns. Investors seeking a blend of income, growth, and ESG credibility should consider adding Teleperformance to their portfolios.

Final Note: Teleperformance's upcoming Capital Markets Day in late 2025 will likely provide further clarity on its AI-driven growth roadmap, offering a catalyst for valuation re-rating.