Translation: Original published in Finnish on 07/17/2025 at 10:30 pm EEST

Despite the growth rate being in line with our expectations, Alma Media's Q2 adjusted operating profitability climbed higher than expected, once again proving the company's excellent cost efficiency in a weak market environment. Reflecting this, we made some slight upward revisions to our profitability forecasts for the next few years. Reflecting the estimate changes, we raise our target price to EUR 13.9 (was 13.0) per share and reiterate our Accumulate recommendation. The Q4 interview with Alma Media’s CEO can be viewed here.

Cost efficiency strengthens the result in a subdued market

Alma Media’s Q2 revenue grew by just under 5% year-on-year to 83.7 MEUR, which was in line with our expectations. The revenue development met expectations fairly well, also by segment, although Career was affected somewhat more strongly than we anticipated by the broad-based softness in the recruitment market. As we expected, the group’s Q2 growth was supported by Marketplaces' acquisitions, but its organic growth was brisker than we expected. Alma Media’s adjusted EBIT was 21.1 MEUR in Q2, which was in line with the comparison period and stronger than our 25.2% margin estimate.  This was a result of continued improvement in cost efficiency, which was reflected in all segments achieving better and generally very good profitability levels compared to the reference period. The reported result, impacted by restructuring costs, exceeded our forecast to a lesser extent, but this does not change the overall picture of a solid Q2 report.

Source: Inderes & Modular Finance (consensus)

The lead accumulated in the early part of the year increased in Q2

In its Q2 report, Alma Media reiterated its guidance for the current year, which indicates stable revenue and adjusted EBIT development compared to the previous year. Our revenue forecasts for this and coming years remained practically unchanged, but thanks to the revisions to the cost structure, our adjusted EBIT forecasts for both this and coming years increased by some 2%. In our forecasts, we expect 2025 revenue to grow by just under 5% and adjusted EBIT by almost 8% from the previous year.

The company began to build a lead on last year's result already in Q1, and this lead increased thanks to a good Q2 result. We do not know the underlying limits of the verbal guidance, but considering the expectation of the market environment improving towards the end of the year and the efficiency measures taken by the company, we find it possible that the guidance will be raised later in the year. At the same time, it should be noted that although we believe that the efficiency measures taken are largely permanent, in a better market situation, the company would invest more in marketing, which would increase the cost structure. In the longer term, we believe the company can still improve efficiency, e.g., through changes in the revenue structure and the elimination of certain overlapping costs. Reflecting this, we expect profitability development in the coming years to be clearly upward.

Earnings growth and dividend are drivers of expected return

Based on the LTM results, the adjusted P/E and EV/EBIT multiples for the stock are around 18x and 15x. In our view, Alma Media's high return on capital, good cash flow generation, and growth outlook justify these higher-than-average valuation multiples. The expected return for the next few years is based on our EPS growth forecast of around 9% and a dividend yield of some 4% based on our estimates. This double-digit expected return clearly exceeds the required return we apply and, therefore, we find the risk/reward ratio attractive. Our cash flow model, which gives a value of EUR 13.9 per share, also supports the upside potential in the valuation.