Dear Clients and Colleagues:
As firms continue to grow in scale and geographic scope, the need for IT expertise will grow in order to connect larger and more complex systems. In addition, the location and type of technology expertise may vary widely: Imagine a company needing a mobile solution in Germany and an infrastructure update in France at the same time. Over the years, the IT consulting industry has become global in nature, supporting clients in both reducing costs as well as driving incremental efficiency.
Sopra Steria, one of our International portfolio holdings, is a major European IT services company offering a number of different services: consulting, systems integration, application outsourcing and application solutions. In summary, Sopra guides businesses in their conversion projects. The Company’s strategic plan is to increase the value of its offerings via an end-to-end approach, combining solutions development and consulting services with traditional IT services activities (integration, business process outsourcing infrastructure and application management).
The company generates the bulk of its revenue in Europe and the UK. For its 2018 fiscal year, the company reported sales of €4,095 million and an EBITDA of €341 million. The founding families and insiders own about 22% of the company. The stock appears inexpensive relative to other IT services firms, trading at 11.4x expected 2020 earnings and offering a 1.9% dividend yield.
Have a great week ahead!
The Global Alpha team
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