Sopra Steria Group SA: Initiation of Coverage- Why Its Shift towards Digital Services & Consulting Is Driving Our Optimism?

Sopra Steria, a European leader in digital services and consulting, reported mixed outcomes in its 2024 financial results. Despite an overall challenging market environment, the company delivered notable achievements and faced several obstacles that could shape its future trajectory. Positively, the company witnessed a sturdy operating margin, reaching 9.8%, a milestone marking the highest since 2007. Its net profit from continuing operations surged by 68.4% to EUR 309.3 million, and the cash generation was robust. The free cash flow amounted to EUR 432 million, representing 7.5% of revenues, which underscores Sopra Steria’s proficient cash management amidst market turbulence. The return on capital employed (ROCE) before tax was also impressive at 21.5%, reflecting improved operational efficiency.