Elis: Squeaky clean compounder but lacking upside risk. Re-instate coverage at Neutral.

Research evidence excerpt

Elis: Squeaky clean compounder but lacking upside risk. Re-instate coverage at Neutral.

Accessible version

Elis

Squeaky clean compounder but lacking

upside risk. Re-instate coverage at Neutral.

Reinstating Coverage: NEUTRAL | PO: 27.60 EUR | Price: 25.48 EUR

Dependable growth reflected in 6% 2027E FCF yield 20 July 2026

Elis has been a 10% annual EPS growth compounder since 2018 and we forecast 9% Equity

from 2025-28E with more bolt-on M&A likely to come. Following a 6pt PE re-rating

since 2022, we see a lack of earnings and valuation catalysts and re-instate coverage Tim Ramskill, CFA >> Research Analyst

with a Neutral rating and DCF derived PO of €27.6 per share, implying a 10% TSR. FCF MLI (UK)

conversion of 80% (due to capex needs) means Dec 27E PE of 12x flows into just a 6% +44tim.ramskill@bofa.com20 7996 3050

FCF yield. We expect to see ROIC remain stable at 10-11%, modestly above WACC. Virginia Montorsi >>

Research Analyst

1) Can 2028E growth algorithm be delivered? MLI44 20(UK)7996 2921

Elis has delivered a very stable growth algorithm with c4% organic and costs are well virginia.montorsi@bofa.com

managed/passed through. We expect a consistent performance to be delivered but our Kate Xiao, CFA >>

benchmarking shows a lack of operational leverage with growth very headcount driven. MLI (UK)

Our end market analysis indicates hospitality demand across Elis’ key geographies has +44 20 7996 3051 kate.xiao2@bofa.com

softened during Q2 whilst the employment component of PMIs is in contraction.

2) Can M&A move the needle on EPS growth?

We expect bolt-ons to recur (+50 deals since 2015) and believe there could be a few Stock Data

medium sized but low visibility possibilities. Absent such a medium sized deal, the EPS Price 25.48 EUR

upside is modest.