AIM:VLX

Stock Analysis Report

Executive Summary

Volex plc manufactures and supplies power cords and cable assemblies in the Americas, Europe, and Asia.

Rewards

Trading at 75.2% below its fair value

Revenue is forecast to grow 9.12% per year

Earnings grew by 263.5% over the past year

Risk Analysis

Highly volatile share price over past 3 months

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Flawless balance sheet with proven track record.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

8.9%

VLX

1.9%

GB Electrical

1.4%

GB Market


1 Year Return

80.7%

VLX

46.2%

GB Electrical

12.4%

GB Market

Return vs Industry: VLX exceeded the UK Electrical industry which returned 45.5% over the past year.

Return vs Market: VLX exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

VLXIndustryMarket
7 Day8.9%1.9%1.4%
30 Day19.1%5.5%2.3%
90 Day76.7%21.4%8.8%
1 Year81.9%80.7%49.5%46.2%18.3%12.4%
3 Year273.2%270.8%30.6%23.8%23.8%8.0%
5 Year145.2%143.5%267.7%-86.2%41.8%8.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: VLX (£1.61) is trading below our estimate of fair value (£6.48)

Significantly Below Fair Value: VLX is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: VLX is good value based on its PE Ratio (22.4x) compared to the Electrical industry average (24x).

PE vs Market: VLX is poor value based on its PE Ratio (22.4x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate VLX's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: VLX is overvalued based on its PB Ratio (2.5x) compared to the GB Electrical industry average (2.4x).


Next Steps

Future Growth

How is Volex forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

9.1%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if VLX's forecast earnings growth is above the savings rate (0.5%).

Earnings vs Market: Insufficient data to determine if VLX's earnings are forecast to grow faster than the UK market

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

Revenue vs Market: VLX's revenue (9.1% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: VLX's revenue (9.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if VLX's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Volex performed over the past 5 years?

69.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: VLX has a large one-off loss of $4.4M impacting its September 29 2019 financial results.

Growing Profit Margin: VLX's current net profit margins (3.5%) are higher than last year (1.1%).


Past Earnings Growth Analysis

Earnings Trend: VLX has become profitable over the past 5 years, growing earnings by 69.4% per year.

Accelerating Growth: VLX's earnings growth over the past year (263.5%) exceeds its 5-year average (69.4% per year).

Earnings vs Industry: VLX earnings growth over the past year (263.5%) exceeded the Electrical industry -9.4%.


Return on Equity

High ROE: VLX's Return on Equity (10.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Volex's financial position?


Financial Position Analysis

Short Term Liabilities: VLX's short term assets ($157.8M) exceed its short term liabilities ($95.6M).

Long Term Liabilities: VLX's short term assets ($157.8M) exceed its long term liabilities ($14.6M).


Debt to Equity History and Analysis

Debt Level: VLX's debt to equity ratio (7.9%) is considered satisfactory.

Reducing Debt: VLX's debt to equity ratio has reduced from 50.8% to 7.9% over the past 5 years.

Debt Coverage: VLX's debt is well covered by operating cash flow (268.6%).

Interest Coverage: VLX's interest payments on its debt are well covered by EBIT (20x coverage).


Balance Sheet

Inventory Level: VLX has a high level of physical assets or inventory.

Debt Coverage by Assets: VLX's debt is covered by short term assets (assets are 15.8x debt).


Next Steps

Dividend

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

1.19%

Current Dividend Yield


Dividend Yield vs Market

company1.2%marketbottom25%1.8%markettop25%5.0%industryaverage1.9%forecastin3Years2.1%

Current dividend yield vs market & industry

Notable Dividend: VLX's dividend (1.23%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: VLX's dividend (1.23%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

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

Growing Dividend: VLX has only been paying a dividend for 9 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (13.2%), VLX's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

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

3.6yrs

Average board tenure


CEO

Volex has no CEO, or we have no data on them.


Board Age and Tenure

3.6yrs

Average Tenure

61yo

Average Age

Experienced Board: VLX's board of directors are considered experienced (3.6 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyUK£11,30015 Nov 19
Daren Morris
EntityIndividual
Role
Member of the Board of Directors
CFO, Chief Legal Officer
Shares10,000
Max PriceUK£1.13
BuyUK£86,83010 Oct 19
Nathaniel Philip Victor Rothschild
EntityIndividual
Role
Chairman of the Board
Executive Chairman
Shares100,000
Max PriceUK£0.87
BuyUK£18,40001 Aug 19
Daren Morris
EntityIndividual
Role
Member of the Board of Directors
CFO, Chief Legal Officer
Shares20,000
Max PriceUK£0.92
BuyUK£49,56601 Aug 19
Nathaniel Philip Victor Rothschild
EntityIndividual
Role
Chairman of the Board
Executive Chairman
Shares53,876
Max PriceUK£0.92
BuyUK£15,75130 Apr 19
Daren Morris
EntityIndividual
Role
Member of the Board of Directors
CFO, Chief Legal Officer
Shares16,937
Max PriceUK£0.93
SellUK£45,00004 Apr 19
Daren Morris
EntityIndividual
Role
Member of the Board of Directors
CFO, Chief Legal Officer
Shares50,000
Max PriceUK£0.90
BuyUK£8,10006 Mar 19
Daren Morris
EntityIndividual
Role
Member of the Board of Directors
CFO, Chief Legal Officer
Shares10,000
Max PriceUK£0.81
BuyUK£199,21106 Mar 19
Nathaniel Philip Victor Rothschild
EntityIndividual
Role
Chairman of the Board
Executive Chairman
Shares249,014
Max PriceUK£0.80

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 37.2%.


Management Team

  • Nat Rothschild (48yo)

    Executive Chairman

    • Tenure: 4.1yrs
    • Compensation: US$620.32k
  • Dom Molloy (73yo)

    Chief Operating Officer

    • Tenure: 1.8yrs
    • Compensation: US$33.97k
  • Daren Morris (49yo)

    CFO, Chief Legal Officer

    • Tenure: 6yrs
    • Compensation: US$767.19k

Board Members

  • Nat Rothschild (48yo)

    Executive Chairman

    • Tenure: 4.1yrs
    • Compensation: US$620.32k
  • Dean Moore (61yo)

    Senior Independent Non-Executive Director

    • Tenure: 2.5yrs
    • Compensation: US$70.00k
  • Adrian Chamberlain (61yo)

    Non-Executive Director

    • Tenure: 3.6yrs
    • Compensation: US$60.00k
  • Daren Morris (49yo)

    CFO, Chief Legal Officer

    • Tenure: 6yrs
    • Compensation: US$767.19k
  • Jeffrey Jackson (67yo)

    Non-Executive Director

    • Tenure: 0.5yrs

Company Information

Volex plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Volex plc
  • Ticker: VLX
  • Exchange: AIM
  • Founded: 1919
  • Industry: Electrical Components and Equipment
  • Sector: Capital Goods
  • Market Cap: UK£246.935m
  • Shares outstanding: 149.66m
  • Website: https://www.volex.com

Number of Employees


Location

  • Volex plc
  • Holbrook House
  • 34-38 Hill Rise
  • Richmond
  • Surrey
  • TW10 6UA
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
VLXAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPJan 1992

Biography

Volex plc manufactures and supplies power cords and cable assemblies in the Americas, Europe, and Asia. The company’s Power Cords division designs, manufactures, and sells power cords, duck heads, and related products to manufacturers of a range of electrical and electronic devices and appliances for use in laptops, PCs, tablets, printers, TVs, games consoles, power tools, kitchen appliances, vacuum cleaners, and electric vehicles. Its Cable Assemblies division designs, manufactures, and sells a range of cables and connectors comprising high-speed copper and fiber-optic cables, and customized optical cable assemblies that transfer electronic, radio-frequency, and optical data for use in various applications, such as data networking equipment, data centers, wireless base stations and cell site installations, mobile computing devices, medical equipment, factory automation, vehicle telematics, agricultural equipment, and alternative energy generation. The company serves various markets and customers, including consumer electronics, medical equipment, data center, telecommunications, industrial robotics, and automotive industries. The company sells its products through its sales force and distributors to original equipment manufacturers and electronic manufacturing services companies. Volex plc was incorporated in 1919 and is headquartered in Richmond, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/17 20:35
End of Day Share Price2020/01/17 00:00
Earnings2019/09/29
Annual Earnings2019/03/31


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.