ASX-listed advertising company Enero Group Ltd (ASX: EGG) could deliver more than 100% returns, one broker says, as the company delivered a solid start to the financial year.
Enero Group operates globally, with offices in 16 cities worldwide, delivering brand marketing and advertising services for a host of blue-chip clients.
Digital cloud upload symbol illustrating modern online investing via Fool Australia platform.
Solid start to the year
The company on Tuesday published a trading update to the ASX, indicating it had had a strong start to the year, growing EBITDA by 13% in the first quarter, "driven by strong Australian agencies' performance and lower corporate costs''.
The company's BMF brand transformation division performed strongly, benefiting from recent large client wins, Enero said, while growing margins from 18.1% to 21.6% compared to the previous corresponding period.
The Hotwire Global division, which focuses on technology clients, "continues to navigate a challenging technology sector environment", Enero said, and continued to cut costs and offshore some roles.
That division will also soon be strengthened with the appointment of a new chief executive, who will start in January 2026.
Commenting on the first-quarter results, Enero Chief Executive Officer Ian Ball said the earnings growth demonstrated the resilience of the company's diversified model.
Our Australian agencies continue to perform strongly, offsetting softer conditions in the global tech sector where Hotwire operates. We're taking deliberate action to reset and refocus Hotwire under new leadership, sharpening its focus on innovation, performance, and growth. Together with ROI·DNA's largest-ever client win, strong AI product momentum, and a leaner operating model built on automation and global centres of excellence, we're building solid momentum in a dynamic market.
The company also said it was targeting a dividend payout of 40%-60% of earnings per share.
Shares cheap at this level
E&P Capital analyst Oliver Coulon said the trading update was positive.
Mr Coulon said while Enero had not provided specific earnings guidance going forward, it "has alluded to new client wins contributing to revenue growth in the second quarter of FY26 in both BMF and Hotwire''.
He added that at current earnings multiples, "the stock is highly debased with seemingly little in the way of expectations in the current share price''.
E&P Capital has a $1.68 per share price target on Enero Group, which would be a 121.3% uplift if achieved.
Some of Enero Group's clients include Tourism Tasmania, international engineering group Honeywell, and Telekom Malaysia.
The company was valued at $68.1 million at the close of trade on Monday.
The company's stock is trading well below its 12-month high of $1.36 and has traded below the $1 mark for most of this calendar year.
