ASX:CGL

Stock Analysis Report

Executive Summary

The Citadel Group Limited, a software and services company, provides software platforms, digital services, and managed services solutions in Australia and internationally.

Rewards

Trading at 8.9% below its fair value

Earnings are forecast to grow 27.92% per year

Risk Analysis

Highly volatile share price over past 3 months

Profit margins (8%) are lower than last year (15%)



Snowflake Analysis

Excellent balance sheet with reasonable growth potential.


Similar Companies

Share Price & News

How has Citadel Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CGL's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0.9%

CGL

5.1%

AU IT

2.0%

AU Market


1 Year Return

-40.4%

CGL

30.2%

AU IT

19.8%

AU Market

Return vs Industry: CGL underperformed the Australian IT industry which returned 34.4% over the past year.

Return vs Market: CGL underperformed the Australian Market which returned 19.4% over the past year.


Shareholder returns

CGLIndustryMarket
7 Day0.9%5.1%2.0%
30 Day0%8.2%3.5%
90 Day37.5%11.3%5.8%
1 Year-39.1%-40.4%32.7%30.2%25.2%19.8%
3 Year-1.3%-7.6%65.8%53.0%39.6%20.9%
5 Year160.3%135.3%140.6%111.2%61.8%25.3%

Price Volatility Vs. Market

How volatile is Citadel Group's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Citadel Group undervalued compared to its fair value and its price relative to the market?

10.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CGL (A$4.84) is trading below our estimate of fair value (A$5.31)

Significantly Below Fair Value: CGL is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: CGL is poor value based on its PE Ratio (30.3x) compared to the IT industry average (21.5x).

PE vs Market: CGL is poor value based on its PE Ratio (30.3x) compared to the Australian market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: CGL is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: CGL is overvalued based on its PB Ratio (2.9x) compared to the AU IT industry average (2.7x).


Next Steps

Future Growth

How is Citadel Group forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

27.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CGL's forecast earnings growth (27.9% per year) is above the savings rate (1.1%).

Earnings vs Market: CGL's earnings (27.9% per year) are forecast to grow faster than the Australian market (9.6% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: CGL's revenue (15% per year) is forecast to grow faster than the Australian market (3.8% per year).

High Growth Revenue: CGL's revenue (15% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CGL's Return on Equity is forecast to be low in 3 years time (15.9%).


Next Steps

Past Performance

How has Citadel Group performed over the past 5 years?

22.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CGL has high quality earnings.

Growing Profit Margin: CGL's current net profit margins (8%) are lower than last year (15%).


Past Earnings Growth Analysis

Earnings Trend: CGL's earnings have grown significantly by 22.4% per year over the past 5 years.

Accelerating Growth: CGL's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CGL had negative earnings growth (-50.2%) over the past year, making it difficult to compare to the IT industry average (60.9%).


Return on Equity

High ROE: CGL's Return on Equity (12.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Citadel Group's financial position?


Financial Position Analysis

Short Term Liabilities: CGL's short term assets (A$56.7M) exceed its short term liabilities (A$40.1M).

Long Term Liabilities: CGL's short term assets (A$56.7M) exceed its long term liabilities (A$17.2M).


Debt to Equity History and Analysis

Debt Level: CGL's debt to equity ratio (13.4%) is considered satisfactory.

Reducing Debt: CGL's debt to equity ratio has increased from 1.4% to 13.4% over the past 5 years.

Debt Coverage: CGL's debt is well covered by operating cash flow (127.1%).

Interest Coverage: CGL earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: CGL has a low level of unsold assets or inventory.

Debt Coverage by Assets: CGL's debt is covered by short term assets (assets are 4.9x debt).


Next Steps

Dividend

What is Citadel Group's current dividend yield, its reliability and sustainability?

2.28%

Current Dividend Yield


Dividend Yield vs Market

company2.3%marketbottom25%2.3%markettop25%5.4%industryaverage2.3%forecastin3Years2.9%

Current dividend yield vs market & industry

Notable Dividend: CGL's dividend (2.23%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.34%).

High Dividend: CGL's dividend (2.23%) is low compared to the top 25% of dividend payers in the Australian market (5.47%).


Stability and Growth of Payments

Stable Dividend: CGL has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: CGL's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (67.6%), CGL's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CGL's dividends in 3 years are forecast to be well covered by earnings (44% payout ratio).


Next Steps

Management

What is the CEO of Citadel Group's salary, the management and board of directors tenure and is there insider trading?

1.4yrs

Average management tenure


CEO

Mark McConnell (47yo)

0.2yrs

Tenure

AU$76,097

Compensation

Mr. Mark Steven McConnell, B.Sc (GEOG), MBA, MAICD, serves as Chief Executive Officer and Managing Director of The Citadel Group Limited since November 12, 2019. Mr. McConnell has been a Non Executive Dire ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD52.52K) is below average for companies of similar size in the Australian market ($USD509.47K).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Management Age and Tenure

1.4yrs

Average Tenure

Experienced Management: CGL's management team is not considered experienced ( 1.4 years average tenure), which suggests a new team.


Board Age and Tenure

0.2yrs

Average Tenure

Experienced Board: CGL's board of directors are not considered experienced ( 0.2 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: CGL insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$3,348,69212 Dec 19
Microequities Asset Management Pty Limited
EntityCompany
Shares895,372
Max PriceAU$3.74
BuyAU$200,01726 Nov 19
Mark McConnell
EntityIndividual
Role
Chief Executive Officer
CEO & MD
Shares51,530
Max PriceAU$3.91
BuyAU$11,99919 Nov 19
Anne Templeman-Jones
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares3,333
Max PriceAU$3.60
BuyAU$35,81117 Nov 19
Peter Leahy
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares10,000
Max PriceAU$3.61
BuyAU$12,810,42804 Nov 19
Pie Funds Management Ltd
EntityCompany
Shares3,660,123
Max PriceAU$3.50
SellAU$6,750,19821 Oct 19
Montgomery Investment Management Pty Ltd
EntityCompany
Shares1,915,597
Max PriceAU$4.34
BuyAU$652,77621 Oct 19
Montgomery Investment Management Pty Ltd
EntityCompany
Shares137,291
Max PriceAU$4.75
SellAU$2,397,24720 Oct 19
Standard Life Aberdeen plc
EntityCompany
Shares636,949
Max PriceAU$4.17
BuyAU$2,144,44720 Oct 19
Standard Life Aberdeen plc
EntityCompany
Shares439,133
Max PriceAU$4.88
BuyAU$22,10901 Sep 19
Mark McConnell
EntityIndividual
Role
Chief Executive Officer
CEO & MD
Shares5,640
Max PriceAU$3.92
BuyAU$13,74929 Aug 19
Anne Templeman-Jones
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares3,500
Max PriceAU$3.93
BuyAU$15,18823 Aug 19
Peter Leahy
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares4,000
Max PriceAU$3.80
BuyAU$2,380,55906 Aug 19
Montgomery Investment Management Pty Ltd
EntityCompany
Shares509,308
Max PriceAU$4.72
BuyAU$8,096,51426 Jul 19
Montgomery Investment Management Pty Ltd
EntityCompany
Shares1,667,041
Max PriceAU$4.86
BuyAU$85,99714 Jun 19
Samuel Weiss
EntityIndividual
Shares20,000
Max PriceAU$4.31
BuyAU$29,22306 Jun 19
Harry McCann
EntityIndividual
Shares7,000
Max PriceAU$4.17
BuyAU$44,22106 Jun 19
Harry McCann
EntityIndividual
Shares10,000
Max PriceAU$4.42
BuyAU$29,74530 May 19
Peter Leahy
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares6,745
Max PriceAU$4.41
BuyAU$40,01430 May 19
Mark McConnell
EntityIndividual
Role
Chief Executive Officer
CEO & MD
Shares9,000
Max PriceAU$4.45
SellAU$6,039,99925 Mar 19
Miles Jakeman
EntityIndividual
Shares800,000
Max PriceAU$7.55

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Mark McConnell (47yo)

    CEO & MD

    • Tenure: 0.2yrs
    • Compensation: AU$76.10k
  • Jenny Martin

    CFO & Company Secretary

    • Tenure: 1.4yrs
    • Compensation: AU$338.69k
  • Mike Ricketts

    General Manager of Technology

    • Tenure: 4.3yrs
  • Stewart Hollingdrake

    Executive Sales Manager

    • Tenure: 3.9yrs
  • Sonja Butcher

    Organisational Development Manager

    • Tenure: 3.8yrs
  • Spencer Chipperfield

    Joint Company Secretary & General Counsel

    • Tenure: 0.5yrs
  • Jen Miller

    Head of Product

    • Ann-Marie Moss

      Head of People & Culture

      • Tenure: 1yrs

    Board Members

    • Anne Templeman-Jones (57yo)

      Independent Non-Executive Director

      • Tenure: 2.3yrs
      • Compensation: AU$86.00k
    • Peter Leahy (66yo)

      Independent Non-Executive Chairman

      • Tenure: 0.2yrs
      • Compensation: AU$86.00k
    • Bob Alexander

      Director

      • Tenure: 0.08yrs

    Company Information

    The Citadel Group Limited's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: The Citadel Group Limited
    • Ticker: CGL
    • Exchange: ASX
    • Founded: 2007
    • Industry: IT Consulting and Other Services
    • Sector: Software
    • Market Cap: AU$233.225m
    • Shares outstanding: 49.31m
    • Website: https://citadelgroup.com.au

    Number of Employees


    Location

    • The Citadel Group Limited
    • 11 Faulding Street
    • Level 1
    • Symonston
    • Australian Capital Territory
    • 2609
    • Australia

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    CGLCHIA (Chi-X Australia)YesOrdinary SharesAUAUDNov 2014
    CGLASX (Australian Securities Exchange)YesOrdinary SharesAUAUDNov 2014
    CGLCHIA (Chi-X Australia)CL A 8.25AUAUDMar 2015

    Biography

    The Citadel Group Limited, a software and services company, provides software platforms, digital services, and managed services solutions in Australia and internationally. It operates in three segments: Health, Knowledge, and Technology. The company primarily offers term managed, software-as-a-service, product sales and installation, consulting, and professional services. It also provides education, specialist consulting and human resource, technology and integration, knowledge management and advisory, systems integration and software development, and information and communications technology managed services, as well as oncology patient-management software. It serves customers in the e-health, national security/defense, government, and tertiary education sectors. The company was founded in 2007 and is based in Symonston, Australia. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/19 10:45
    End of Day Share Price2020/01/17 00:00
    Earnings2019/06/30
    Annual Earnings2019/06/30


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.