CDRO

We rate Codere Online Luxembourg, S.A. (CDRO) as a Hold with a composite score of 62.7/100 at a current price of $7.81. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in stability (72th percentile) and momentum (69th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (63/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Codere Online Luxembourg, S.A. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 62.7/100 places it at rank #449 in our full 7,333-stock universe. At $291M in market capitalization, Codere Online Luxembourg, S.A. is a small-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 13% and favorable momentum (69th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 91% (+31.1pp vs sector) narrow to operating margins of 3% (-0.9pp vs sector) and net margins of 1.9%, yielding a gross-to-net conversion rate of 2%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $7.81, Codere Online Luxembourg, S.A. is trading near fair value based on current fundamentals. Our value factor score of 68/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at EV/EBITDA of 14.2x (at a premium), P/B of 14.7x, P/S of 0.4x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Low uncertainty rating to Codere Online Luxembourg, S.A.. The company exhibits strong financial stability with a beta of 0.88, conservative leverage (0% D/E), and a stability factor in the 72th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 72th percentile with quality at the 68th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 91% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; above-average stability (72th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Codere Online Luxembourg, S.A.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 65.0%, disciplined leverage (0% D/E). Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Codere Online Luxembourg, S.A. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 21.0% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Codere Online Luxembourg, S.A. receives a Hold rating with a composite score of 62.7/100 (rank #449 of 7,333). Our quantitative framework assigns a Narrow Moat (63/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 68/100.

Our analysis supports a neutral stance on Codere Online Luxembourg, S.A.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.