I am back from the banking capital of Frankfurt, where I visited the German Equity Forum (EKF) from Monday to Wednesday. As part of this large analysts and investors conference, German IT service provider Datagroup also presented itself, which had only presented good preliminary figures for the 2022/2023 financial year a few days ago.

Nevertheless, the Datagroup share has declined this year. Financial officer Oliver Thome began his presentation in Frankfurt with the fact that analysts and investors currently double sigh when dealing with Datagroup: A German medium-sized company that takes care of the IT of companies from the German-speaking area. This is currently almost a double burden factor.

I consider this „Germany penalty“ on the stock exchange to be exaggerated. On the one hand, many companies are acting internationally, on the other hand, there are also good growth opportunities in the German market, as the example of Datagroup shows. Therefore, the share has become even more interesting after the setback on an annual basis.

Before we look at the latest figures of the IT service provider and the Datagroup share, I would like to briefly introduce you to the company and its business model.

Datagroup in portrait Founded in 1983 in Filderstadt near Stuttgart, Datagroup is one of the leading German IT service companies. Approximately 3,000 employees at locations throughout Germany design, implement and operate IT infrastructures and business applications such as SAP.

With the product CORBOX, Datagroup is a so-called full service provider and looks after more than 600,000 IT workplaces for medium-sized and large companies as well as public clients. The company grows organically (that is, on its own) and regularly also through acquisitions.

Solid turnover and increasing profits In the last financial year 2022/2023, Datagroup achieved a turnover of 497.8 million euros and reached the upper end of the forecast range (485 to 500 million euros). However, this was slightly below the previous year’s figure of 501.4 million euros. When looking at the previous year’s figures, however, it must be taken into account that Datagroup had won some special orders in the Corona phase, which expired with the end of the pandemic.

Positively, the development of earnings looks good: The earnings before interest, taxes and depreciation (EBITDA) increased in the last financial year by 4.9% to 80.2 million euros. This even exceeded the forecast range of 76 to 80 million euros.

The operating result (EBIT) could be increased disproportionately through efficiency measures and the focus on profitable contracts and, despite investments of around 1 million euros in the 4th quarter in the future theme of artificial intelligence, was 45.3 million euros, 9.3% above the previous year’s figure.

The operating profit margin (EBIT margin) was 9.1%, 0.8 percentage points above the previous year’s figure and thus also above the medium-term target margin of 9%. Net income increased by 28.6% from 22.0 to 28.3 million euros, and earnings per share rose from 2.64 to 3.39 euros.

Datagroup focuses strongly on topics such as artificial intelligence (AI), IT security and cloud, as these enable the company to achieve future growth. After a weaker year 2023, the Datagroup share could take off again in the coming year. Therefore, according to my analysis, a closer look at the share is worthwhile.