LSE:CHG

Stock Analysis Report

Executive Summary

Chemring Group PLC supplies countermeasures, sensors, and energetic solutions to aerospace, defense, and security industries in the United States, the United Kingdom, Norway, and Australia.

Rewards

PE ratio (32.4x) is below the Aerospace & Defense industry average (34.3x)

Earnings are forecast to grow 11.33% per year

Became profitable this year

Risk Analysis

Highly volatile share price over past 3 months



Snowflake Analysis

Excellent balance sheet with acceptable track record.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

4.4%

CHG

3.5%

GB Aerospace & Defense

1.4%

GB Market


1 Year Return

77.6%

CHG

30.0%

GB Aerospace & Defense

12.4%

GB Market

Return vs Industry: CHG exceeded the UK Aerospace & Defense industry which returned 28.7% over the past year.

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


Shareholder returns

CHGIndustryMarket
7 Day4.4%3.5%1.4%
30 Day14.2%7.4%1.8%
90 Day42.3%16.2%8.8%
1 Year81.6%77.6%34.5%30.0%18.3%12.4%
3 Year54.2%46.7%29.7%16.1%23.8%8.0%
5 Year42.0%16.1%32.8%5.6%41.8%8.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

32.73x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CHG (£2.68) is trading above our estimate of fair value (£1.26)

Significantly Below Fair Value: CHG is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: CHG is good value based on its PE Ratio (32.4x) compared to the Aerospace & Defense industry average (34.3x).

PE vs Market: CHG is poor value based on its PE Ratio (32.4x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: CHG is poor value based on its PEG Ratio (2.9x)


Price to Book Ratio

PB vs Industry: CHG is good value based on its PB Ratio (2.5x) compared to the GB Aerospace & Defense industry average (2.5x).


Next Steps

Future Growth

How is Chemring Group forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

11.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CHG's forecast earnings growth (11.3% per year) is above the savings rate (0.5%).

Earnings vs Market: CHG's earnings (11.3% per year) are forecast to grow slower than the UK market (11.7% per year).

High Growth Earnings: CHG's earnings are forecast to grow, but not significantly.

Revenue vs Market: CHG's revenue (6.9% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: CHG's revenue (6.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CHG's Return on Equity is forecast to be low in 3 years time (13%).


Next Steps

Past Performance

How has Chemring Group performed over the past 5 years?

-9.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CHG has high quality earnings.

Growing Profit Margin: CHG became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: CHG has become profitable over the past 5 years, growing earnings by -9.2% per year.

Accelerating Growth: CHG has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: CHG has become profitable in the last year, making it difficult to compare its past year earnings growth to the Aerospace & Defense industry (-13.2%).


Return on Equity

High ROE: CHG's Return on Equity (7.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Chemring Group's financial position?


Financial Position Analysis

Short Term Liabilities: CHG's short term assets (£140.3M) do not cover its short term liabilities (£149.0M).

Long Term Liabilities: CHG's short term assets (£140.3M) exceed its long term liabilities (£43.5M).


Debt to Equity History and Analysis

Debt Level: CHG's debt to equity ratio (25.2%) is considered satisfactory.

Reducing Debt: CHG's debt to equity ratio has reduced from 52% to 25.2% over the past 5 years.

Debt Coverage: CHG's debt is well covered by operating cash flow (80.4%).

Interest Coverage: CHG's interest payments on its debt are well covered by EBIT (6.8x coverage).


Balance Sheet

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

Debt Coverage by Assets: CHG's debt is covered by short term assets (assets are 1.8x debt).


Next Steps

Dividend

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

1.33%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Chemring Group before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company1.3%marketbottom25%1.8%markettop25%5.0%industryaverage2.8%forecastin3Years1.6%

Current dividend yield vs market & industry

Notable Dividend: CHG's dividend (1.35%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: CHG's dividend (1.35%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

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

Growing Dividend: CHG's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (43.6%), CHG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CHG's dividends in 3 years are forecast to be well covered by earnings (29.7% payout ratio).


Next Steps

Management

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

1.5yrs

Average management tenure


CEO

Michael Ord 0

1.5yrs

Tenure

UK£1,021,000

Compensation

Mr. Michael Ord has been Group Chief Executive and Director at Chemring Group PLC since June 1, 2018. Prior to joining Chemring, Michael worked for BAE Systems, where he held a number of senior roles acros ...


CEO Compensation Analysis

Compensation vs Market: Michael's total compensation ($USD1.33M) is about average for companies of similar size in the UK market ($USD1.13M).

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


Management Age and Tenure

1.5yrs

Average Tenure

Experienced Management: CHG's management team is not considered experienced ( 1.5 years average tenure), which suggests a new team.


Board Age and Tenure

3.3yrs

Average Tenure

58yo

Average Age

Experienced Board: CHG's board of directors are considered experienced (3.3 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUK£18,19410 Apr 19
Sarah Ellard
EntityIndividual
Role
Member of the Board of Directors
Group Legal Director
Shares12,600
Max PriceUK£1.44

Ownership Breakdown

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


Management Team

  • Sarah Ellard (48yo)

    Group Legal Director

    • Tenure: 8.3yrs
    • Compensation: UK£753.00k
  • Andrew Lewis (48yo)

    Group Finance Director & Director

    • Tenure: 3yrs
    • Compensation: UK£1.16m
  • Bill Currer

    President of CHG Group

    • Tenure: 1.3yrs
  • Simon Darling

    Managing Director of Chemring Countermeasures - UK

    • Clancy Murphy

      Chief People Officer

      • Tenure: 1.2yrs
    • Michael Ord

      Group Chief Executive & Director

      • Tenure: 1.5yrs
      • Compensation: UK£1.02m
    • Paul MacGregor

      Managing Director of Roke


      Board Members

      • Carl-Peter Forster (65yo)

        Non-Executive Chairman

        • Tenure: 3.5yrs
        • Compensation: UK£200.00k
      • Andrew O. Davies (55yo)

        Independent Non-Executive Director

        • Tenure: 3.7yrs
        • Compensation: UK£65.00k
      • Sarah Ellard (48yo)

        Group Legal Director

        • Tenure: 8.3yrs
        • Compensation: UK£753.00k
      • Nigel Young (65yo)

        Senior Independent Non-Executive Director

        • Tenure: 3.8yrs
        • Compensation: UK£63.00k
      • Stephen King (58yo)

        Independent Non-Executive Director

        • Tenure: 1.1yrs
        • Compensation: UK£53.00k
      • Laurie Bowen (58yo)

        Independent Non-Executive Director

        • Tenure: 0.4yrs
        • Compensation: UK£14.00k
      • Andrew Lewis (48yo)

        Group Finance Director & Director

        • Tenure: 3yrs
        • Compensation: UK£1.16m
      • Michael Ord

        Group Chief Executive & Director

        • Tenure: 1.5yrs
        • Compensation: UK£1.02m

      Company Information

      Chemring Group PLC's company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Chemring Group PLC
      • Ticker: CHG
      • Exchange: LSE
      • Founded: 1905
      • Industry: Aerospace and Defense
      • Sector: Capital Goods
      • Market Cap: UK£757.970m
      • Shares outstanding: 280.73m
      • Website: https://www.chemring.co.uk

      Number of Employees


      Location

      • Chemring Group PLC
      • Roke Manor
      • Old Salisbury Lane
      • Romsey
      • Hampshire
      • SO51 0ZN
      • United Kingdom

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      CHGLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
      CMGM.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
      CMN1DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
      CHGLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
      CMGM.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDOct 2010

      Biography

      Chemring Group PLC supplies countermeasures, sensors, and energetic solutions to aerospace, defense, and security industries in the United States, the United Kingdom, Norway, and Australia. The company operates through two segments, Sensors & Information and Countermeasures & Energetics. The Sensors & Information segment develops and manufactures explosive hazard detection equipment; chemical and biological threat detection equipment; and electronic countermeasures, as well as network protection technologies. The Countermeasures & Energetics segment offers expendable countermeasures for air, sea, and land platforms; cartridge/propellant actuated devices; pyrotechnic devices for satellite launch and deployment; aircraft and space launch systems; missile components; extruded double base propellants; separation sub-systems; actuators; and energetic materials, as well as aircrew egress and safety systems. Chemring Group PLC also exports its products. The company has operations in approximately 50 countries worldwide. Chemring Group PLC was founded in 1905 and is headquartered in Romsey, the United Kingdom. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/19 20:32
      End of Day Share Price2020/01/17 00:00
      Earnings2019/10/31
      Annual Earnings2019/10/31


      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.