This aims to increase the share of the technology segment, i.e., remote alarm and video surveillance services, which currently accounts for just under a third of consolidated revenue but where margins are twice as high as in the traditional security services segment, i.e., the employment of security guards.
In 2022 it accelerated this transition by the acquisition of Stanley Security (formerly a subsidiary of Stanley Black & Decker)—see article, "As a true dividend aristocrat Stanley Black & Decker intends to get out of the rut."
Securitas now has revenues of around $15bn, compared with $9.6bn ten years ago. Thanks to a slow but necessary expansion of margins made possible by the shift in activities from one segment to another, operating profit, net income, and free cash flow have doubled over the period.
However, EPS has stagnated over the period, as the number of shares outstanding has more than halved following the acquisition of Stanley—the largest in Securitas' history. This explains why the share price is exactly the same as it was at the time, despite the very real growth in business.
Overall, the market has been fairly neutral about these developments. This is reflected in the company's current valuation, based on its historical multiples, both in terms of operating profit multiples and dividend yield.
A key concern for the Swedish company—whose largest shareholder remains the well-known holding company Investment AB Latour—is its ability to grow outside of external growth operations and to generate returns on these operations that are not labor-intensive.
Faced with recruitment difficulties and skyrocketing wage costs, US company Allied Universal, the global leader in the sector, had to postpone its initial public offering, originally planned for spring 2023. There is no doubt that the difficulties it is experiencing will also affect the Swedish group.
