Stock Analysis & Valuation Adecco Group AG (0QNM.L)

• Previous Close: £22.62
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	17.80	-21
Intrinsic value (DCF)	10.45	-54
Graham-Dodd Method		n/a
Graham Formula	7.80	-66

Strategic Investment Analysis

Company Overview

Adecco Group AG (LSE: 0QNM) is a global leader in human resource services, providing flexible and permanent staffing, outsourcing, training, and talent advisory solutions across 59 countries. Headquartered in Zurich, Switzerland, the company operates under well-known brands such as Adecco, Adia, General Assembly, and Modis, serving businesses in Europe, North America, Asia Pacific, and beyond. With over 4,300 branches worldwide, Adecco specializes in workforce transformation, upskilling, and digital staffing, positioning itself as a key player in the $600+ billion global staffing industry. The company’s diversified service portfolio, including its tech-focused Modis division and career transition arm LHH, ensures resilience across economic cycles. Adecco’s strong market presence, combined with its investments in digital recruitment platforms like Hired, reinforces its competitive edge in the evolving labor market. As businesses increasingly prioritize workforce agility, Adecco’s integrated HR solutions make it a critical partner for enterprises navigating talent shortages and digital transformation.

Investment Summary

Adecco Group presents a mixed investment case with both opportunities and risks. The company benefits from a diversified geographic footprint and a leading position in the global staffing industry, supported by recurring revenue streams from flexible workforce solutions. However, its high beta (1.2) reflects sensitivity to economic cycles, with demand for staffing services often contracting during downturns. While Adecco’s revenue (CHF 23.1B in FY 2023) and net income (CHF 303M) demonstrate scale, its elevated debt (CHF 3.48B) and modest operating cash flow (CHF 707M) warrant caution. The dividend yield (~2.7%) offers income appeal, but investors should weigh exposure to wage inflation and competitive pressures. Long-term growth hinges on digital transformation initiatives and upskilling demand, but near-term macroeconomic uncertainty tempers upside potential.

Competitive Analysis

Adecco Group competes in a fragmented but highly competitive global staffing market, where scale, brand recognition, and technological capabilities are critical differentiators. The company’s primary advantage lies in its extensive geographic reach (59 countries) and multi-brand strategy, which allows it to serve diverse client needs—from IT staffing (Modis) to executive search (Badenoch + Clark). However, Adecco faces stiff competition from larger rivals like Randstad (more diversified revenue streams) and specialized players like Robert Half (strong U.S. focus). Its digital investments, such as the Hired platform, lag behind pure-play tech recruiters like Upwork. While Adecco’s training arm (General Assembly) provides a niche edge in upskilling, it lacks the tech integration of LinkedIn Learning. Pricing pressure from low-cost regional staffing firms and the rise of direct hiring platforms (e.g., Indeed) further erode margins. The company’s outsourcing division (Pontoon) competes with Accenture’s HR BPO services but lacks equivalent consulting depth. Overall, Adecco’s broad portfolio insulates it from sector-specific downturns, but its middle-of-the-pack profitability (EBITDA margins ~4–5%) suggests limited pricing power versus peers.

Major Competitors

• Randstad N.V. (RAND.AS): Randstad, the largest global staffing firm, outperforms Adecco in revenue and profitability, with a stronger presence in high-margin professional staffing. Its tech-driven platforms (e.g., Randstad Digital) compete directly with Modis. However, Randstad’s heavier reliance on Europe (~70% of sales) exposes it to regional economic volatility. Its recent AI recruitment tools give it an innovation edge over Adecco.
• ManpowerGroup Inc. (MAN): Manpower leads in the U.S. and IT staffing (via Experis), with higher margins than Adecco. Its strong corporate client base and workforce analytics tools are strengths, but its limited footprint in Asia-Pacific (vs. Adecco’s 20% revenue share) restricts growth in emerging markets. Manpower’s RPO (recruitment process outsourcing) division competes with Pontoon but lacks Adecco’s European depth.
• Robert Half International Inc. (RHI): Robert Half dominates specialized professional staffing (finance, IT, legal) with superior margins (~8–10% vs. Adecco’s ~4%). Its U.S.-centric model (85% of sales) limits diversification but provides pricing power in high-skill segments. Unlike Adecco, it avoids low-margin industrial staffing, but its lack of a meaningful training or outsourcing business reduces resilience.
• ASHTEAD Group PLC (ASHTY): Ashtead’s Sunbelt division competes with Adecco in industrial temp staffing but focuses on equipment rentals—a higher-margin model. Its U.S. exposure (80% of revenue) is a strength amid labor shortages but lacks Adecco’s global diversification. Ashtead’s capex-heavy model contrasts with Adecco’s asset-light approach.
• Upwork Inc. (UPWK): Upwork’s digital freelance platform threatens Adecco’s tech staffing (Modis) with lower overheads and global talent access. However, it lacks Adecco’s enterprise relationships and cannot provide large-scale onsite staffing. Upwork’s ~20% revenue growth outpaces Adecco but comes with persistent profitability challenges.