strong top line, with almost no cost increase

Enero is a particular case at the moment.
It is, at the same time interesting, but also quite complicated.

1/ Interesting because it is really cheap, compared to its growth profile.
Based on H1 results annualized, Egg has a PE of 10, while it has been growing its revenue (organic) by 19 % during H1 and almost doubled its EBITDA margin.
Again if you annualize their H1 results, the stock has an EV/EBITDA of 4.5 and a free cash flow yield of 20 % (excluding the positive affect of working capital for H1). To be fair, these last 2 valuation metrics are a bit misleading because they include the minority interests of OB Media.

2/ It is also a complicate case
- Enero has always been a tough business, given that they have a short revenue visibility,
- what's driving a large part of the earning growth now is OB Media (owned at 51 %). Egg classifies OB Media as a non core business.
OB Media is a platform which generates revenues by connecting publishers to search engines. Egg has owned this business for 10 years, but it has really taken off with covid and keeps increase at a fast pace since then.
It explains a large part of their revenue increase for H1 21 in the US : + 57 % (+ 66 % on a constant currency basis).

3/ Enero business since covid
Given the nature of their business (marketing services), there were low expectations with covid.
In fact, the company has done much better than expected :
- in FY 20, Enero increased its revenues by 4.9 % (and + 3 % during H2, which showed a great resistance),
- since the start of FY 21, their business keeps accelerating : + 11 % during Q1 and + 26 % during Q2.
What is also interesting is the trend for costs : flat during H1 21 (vs + 19 % for revenues). It is explained by no material increase of headcount and a decrease of around 1 m for travel costs.
It seems to be explained by the fact that the company want to focus on large existing accounts.
The impact of jobkeeper was also limited : 1 m during Q1 and 0.1 m during Q2.

4/ Sustainable growth and margin ?
While their business looked traditionally quite cyclical, the structural growth of OB Media is now adding more stability to their earnings.
The company also answered to this question during H1 21, by increasing its dividend by 320 % (vs + 127 % for EPS).