Buy Signal on Elis (ELIS-FR)

We had an Enter Long Strategic signal on September 28, 2021, triggered by our system on Elis, ELIS-FR, the French Business Services company.

Our system also triggered an Enter Long Tactical signal on September 8, 2021 that imply a likely bullish acceleration. Elis has a poor track record, with a Behavioral score of 1/10, therefore the signal remains mainly tactical in our view.

Elis is a € 3.7 Bn market cap and a a France-based company that offers a number of services in the fields of cleanliness, image, hygiene and well-being. The Company offers the rental and maintenance of flat linen, professional clothing, as well as hygiene appliance and well-being services. Its linen services include: aprons, dish towels; linens for hotel and restaurant trades; linens for beauty care salons and spas, hairdressing and fitness facilities, as well as linen for health care establishments. It offers its clothing services to: hotels, restaurants and receptions, beauty care salons and spas, among others. It also offers accessories and consumables for clean room operators. It provides sanitary solutions for hand-washing and toilet paper dispensers, among others. It serves the hotel, catering, healthcare, industry, retail and services sectors, thanks to Its network and distribution centers in Europe and South America.

With most of its business operated with Hotels and Restaurants, Elis is cleary a « reopening stock ». Revenues were hit hard during lock down, and down 15% in 2020 to €2.8 Bn while the operating margin remained resilient at 10.4% (versus 13.9% in 2019). The recovery is in progress and Elis is expected to regain its 2019 business level in 2022, with revenues expected at € 3.28 Bn coupled with a 13.7% margin. The dividend per share is expected to reach € 0.25 in 2021 and to increase to € 0.45 in 2022 (corresponding to a 2.2% dividend yield).

Short term catalyst : Reopening, dividend increase.

This signal looks consistent with the strong momentum in the « reopening trade » theme.