Avon Protection (LSE:AVON) - Share price, News & Analysis

Q: What is the Fair Price of AVON when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

AVON (£9.83) is trading below our estimate of [[fair value]] (£26.77)

AVON fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	5/6
Past Performance	0/6
Financial Health	3/6
Dividends	2/6

AVON Stock Overview

Avon Protection plc designs, manufactures, and sells chemical, biological, radiological, and nuclear respiratory protection systems for military, law enforcement, and fire markets worldwide.

Rewards

Trading at 63.3% below our estimate of its fair value

Earnings are forecast to grow 93.93% per year

Risk Analysis

Dividend of 3.23% is not well covered by earnings or forecast to be in the next 3 years

Avon Protection Competitors

Cohort

AIM:CHRT

UK£215.6m

Chemring Group

LSE:CHG

UK£938.7m

Senior

LSE:SNR

UK£600.1m

QinetiQ Group

LSE:QQ.

UK£2.1b

Price History & Performance

Summary of all time highs, changes and price drops for Avon Protection
Historical stock prices
Current Share Price	UK£9.83
52 Week High	UK£29.50
52 Week Low	UK£8.60
Beta	0.85
1 Month Change	4.69%
3 Month Change	-15.70%
1 Year Change	-66.68%
3 Year Change	-40.06%
5 Year Change	-5.48%
Change since IPO	223.36%

Recent News & Updates

Jun 01

Avon Protection plc (LON:AVON) Shares Could Be 46% Below Their Intrinsic Value Estimate

Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Avon Protection plc...

Shareholder Returns

	AVON	GB Aerospace & Defense	GB Market
7D	-3.8%	-0.3%	-0.3%
1Y	-66.7%	19.1%	-9.1%

Return vs Industry: AVON underperformed the UK Aerospace & Defense industry which returned 19.1% over the past year.

Return vs Market: AVON underperformed the UK Market which returned -8.9% over the past year.

Price Volatility

Is AVON's price volatile compared to industry and market?
AVON volatility
AVON Average Weekly Movement	7.3%
Aerospace & Defense Industry Average Movement	4.1%
Market Average Movement	5.4%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.7%

Stable Share Price: AVON is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: AVON's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1885	1,000	Paul McDonald	https://www.avon-protection-plc.com

Avon Protection plc designs, manufactures, and sells chemical, biological, radiological, and nuclear respiratory protection systems for military, law enforcement, and fire markets worldwide. It offers masks and filters with portfolio of respirators, filters, powered air, and supplied air and long term pedigree for military contracting and supplying chain; escape hoods; underwater rebreathers; and thermal image camera technology and self-contained breathing apparatus, as well as accessories. The company also provides ballistic protection, such as helmets, helmet liner, impact protection, retention system, and body and flat armor.

Avon Protection Fundamentals Summary

How do Avon Protection's earnings and revenue compare to its market cap?
AVON fundamental statistics
Market Cap	US$355.35m
Earnings (TTM)	-US$35.70m
Revenue (TTM)	US$248.20m

1.4x

P/S Ratio

-10.0x

P/E Ratio

Is AVON overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
AVON income statement (TTM)
Revenue	US$248.20m
Cost of Revenue	US$167.00m
Gross Profit	US$81.20m
Other Expenses	US$116.90m
Earnings	-US$35.70m

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

Nov 22, 2022

Earnings per share (EPS)	-1.21
Gross Margin	32.71%
Net Profit Margin	-14.38%
Debt/Equity Ratio	34.3%

How did AVON perform over the long term?

See historical performance and comparison

Dividends

3.2%

Current Dividend Yield

-39%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is AVON undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for AVON?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for AVON. This is calculated by dividing AVON's market cap by their current preferred multiple.
What is AVON's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$355.35m

AVON key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.7x
Enterprise Value/EBITDA	38.3x
PEG Ratio	n/a

Price to Sales Ratio vs Peers

How does AVON's PS Ratio compare to its peers?

AVON PS Ratio vs Peers

The above table shows the PS ratio for AVON vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PS	Estimated Growth	Market Cap
Peer Average	1.6x
CHRT Cohort	1.6x	8.8%	UK£215.6m
CHG Chemring Group	2.3x	4.9%	UK£938.7m
SNR Senior	0.8x	6.4%	UK£600.1m
QQ. QinetiQ Group	1.6x	7.4%	UK£2.1b
AVON Avon Protection	1.4x	4.7%	UK£291.0m

Price-To-Sales vs Peers: AVON is good value based on its Price-To-Sales Ratio (1.4x) compared to the peer average (1.6x).

Price to Earnings Ratio vs Industry

How does AVON's PE Ratio compare vs other companies in the European Aerospace & Defense Industry?

Price-To-Sales vs Industry: AVON is expensive based on its Price-To-Sales Ratio (1.4x) compared to the UK Aerospace & Defense industry average (1.4x)

Price to Sales Ratio vs Fair Ratio

What is AVON's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

AVON PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	1.4x
Fair PS Ratio	1.1x

Price-To-Sales vs Fair Ratio: AVON is expensive based on its Price-To-Sales Ratio (1.4x) compared to the estimated Fair Price-To-Sales Ratio (1.1x).

Share Price vs Fair Value

What is the Fair Price of AVON when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: AVON (£9.83) is trading below our estimate of fair value (£26.77)

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

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is Avon Protection forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

93.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: AVON is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (0.9%).

Earnings vs Market: AVON is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: AVON is expected to become profitable in the next 3 years.

Revenue vs Market: AVON's revenue (4.7% per year) is forecast to grow faster than the UK market (3.9% per year).

High Growth Revenue: AVON's revenue (4.7% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: AVON's Return on Equity is forecast to be high in 3 years time (28%)

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Past Performance

How has Avon Protection performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-62.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: AVON is currently unprofitable.

Growing Profit Margin: AVON is currently unprofitable.

Past Earnings Growth Analysis

Earnings Trend: AVON is unprofitable, and losses have increased over the past 5 years at a rate of 62.5% per year.

Accelerating Growth: Unable to compare AVON's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: AVON is unprofitable, making it difficult to compare its past year earnings growth to the Aerospace & Defense industry (-20.2%).

Return on Equity

High ROE: AVON has a negative Return on Equity (-17.7%), as it is currently unprofitable.

Discover strong past performing companies

Financial Health

How is Avon Protection's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: AVON's short term assets ($130.1M) exceed its short term liabilities ($48.7M).

Long Term Liabilities: AVON's short term assets ($130.1M) exceed its long term liabilities ($129.5M).

Debt to Equity History and Analysis

Debt Level: AVON's net debt to equity ratio (28.1%) is considered satisfactory.

Reducing Debt: AVON's debt to equity ratio has increased from 2.8% to 34.3% over the past 5 years.

Debt Coverage: AVON's debt is not well covered by operating cash flow (18.9%).

Interest Coverage: Insufficient data to determine if AVON's interest payments on its debt are well covered by EBIT.

Balance Sheet

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Dividend

What is Avon Protection current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.23%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: AVON's dividend (3.23%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: AVON's dividend (3.23%) is low compared to the top 25% of dividend payers in the UK market (5.11%).

Stability and Growth of Payments

Stable Dividend: AVON's dividend payments have been volatile in the past 10 years.

Growing Dividend: AVON's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: AVON is paying a dividend but the company is unprofitable.

Cash Payout to Shareholders

Cash Flow Coverage: AVON is paying a dividend but the company has no free cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

1.6yrs

Average management tenure

CEO

Paul McDonald (48 yo)

5.5yrs

Tenure

US$1,385,270

Compensation

Mr. Paul McDonald has been Chief Executive at Avon Protection plc (formerly known as Avon Rubber p.l.c.) since February 15, 2017 and serves as its Director. Mr. McDonald served as the Managing Director of...

CEO Compensation Analysis

Compensation vs Market: Paul's total compensation ($USD1.39M) is above average for companies of similar size in the UK market ($USD1.06M).

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

Leadership Team

Experienced Management: AVON's management team is not considered experienced ( 1.6 years average tenure), which suggests a new team.

Board Members

Experienced Board: AVON's board of directors are not considered experienced ( 2.3 years average tenure), which suggests a new board.

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

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

Data	Last Updated (UTC time)
Company Analysis	2022/08/11 00:00
End of Day Share Price	2022/08/11 00:00
Earnings	2022/04/02
Annual Earnings	2021/09/30