Alejandro Estebaranz presented his in-depth investment thesis on Neurones (Paris: NRO) at European Investing Summit 2016.
Neurones is an IT consulting firm that operates in three areas: consulting, integration of technological solutions, and outsourcing of information systems. The French IT market is isolated from offshore competition because of language barriers. Neurones has earned returns on capital of 20+% across the cycle. Two-thirds of the growth has been organic (~9% per year ), the rest has come from M&A. The company has a great corporate culture, with the lowest employee turnover in the industry. Sales have grown every year since it went public, including during the financial crisis. Despite a sales CAGR of ~15% over the twenty years, Neurones still controls less than 1.5% of the French IT consulting market. The founder owns 65+% of the company and is a Buffett follower. 75% of Neurones’ revenue is recurring. The company has little analyst coverage (~€500 million market cap) and trades at 7.5x EV to 2017E EBITDA, 8.5x EV to 2017E EBIT, and 13x cash-adjusted P/E.
About the instructor:
Alejandro Estebaranz is the co-Investment advisor of True Value fund since its inception. True Value is a long only equity fund founded in January 2014, and focused in small and mid caps. Prior to True Value, Alejandro worked as an analyst for private investment partnerships. He holds a degree in mechanical engineering and a degree in industrial engineering.
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