LSE:WEIR

Stock Analysis Report

Executive Summary

The Weir Group PLC designs, manufactures, and sells highly-engineered products and services worldwide.

Rewards

Earnings are forecast to grow 21.22% per year

Pays a reliable dividend of 3.08%

Risk Analysis

Debt is not well covered by operating cash flow

Dividend of 3.08% is not well covered by earnings

Large one-off items impacting financial results

Profit margins (2.5%) are lower than last year (8.8%)

+ 1 more risk


Snowflake Analysis

Reasonable growth potential average dividend payer.


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Share Price & News

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


Latest Share Price and Events

Stable Share Price: WEIR has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.4%

WEIR

-1.4%

GB Machinery

-1.1%

GB Market


1 Year Return

-5.9%

WEIR

17.2%

GB Machinery

12.7%

GB Market

Return vs Industry: WEIR underperformed the UK Machinery industry which returned 20.7% over the past year.

Return vs Market: WEIR underperformed the UK Market which returned 12.7% over the past year.


Shareholder returns

WEIRIndustryMarket
7 Day-4.4%-1.4%-1.1%
30 Day-10.5%-3.7%0.07%
90 Day0.7%13.9%6.2%
1 Year-3.1%-5.9%20.6%17.2%18.6%12.7%
3 Year-27.1%-32.3%27.7%17.8%21.8%6.2%
5 Year-5.3%-17.4%54.4%32.8%42.4%9.6%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

53.92x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: WEIR (£14.99) is trading above our estimate of fair value (£13.6)

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


Price To Earnings Ratio

PE vs Industry: WEIR is poor value based on its PE Ratio (58.3x) compared to the Machinery industry average (18.8x).

PE vs Market: WEIR is poor value based on its PE Ratio (58.3x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: WEIR is poor value based on its PEG Ratio (2.7x)


Price to Book Ratio

PB vs Industry: WEIR is good value based on its PB Ratio (1.8x) compared to the GB Machinery industry average (1.8x).


Next Steps

Future Growth

How is Weir Group forecast to perform in the next 1 to 3 years based on estimates from 20 analysts?

24.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: WEIR's forecast earnings growth (21.2% per year) is above the savings rate (0.5%).

Earnings vs Market: WEIR's earnings (21.2% per year) are forecast to grow faster than the UK market (11.7% per year).

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

Revenue vs Market: WEIR's revenue (4.3% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: WEIR's revenue (4.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: WEIR's Return on Equity is forecast to be low in 3 years time (10.8%).


Next Steps

Past Performance

How has Weir Group performed over the past 5 years?

8.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: WEIR has a large one-off loss of £146.0M impacting its June 30 2019 financial results.

Growing Profit Margin: WEIR's current net profit margins (2.5%) are lower than last year (8.8%).


Past Earnings Growth Analysis

Earnings Trend: WEIR's earnings have grown by 8.7% per year over the past 5 years.

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

Earnings vs Industry: WEIR had negative earnings growth (-64.6%) over the past year, making it difficult to compare to the Machinery industry average (3%).


Return on Equity

High ROE: WEIR's Return on Equity (3.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Weir Group's financial position?


Financial Position Analysis

Short Term Liabilities: WEIR's short term assets (£1.9B) exceed its short term liabilities (£957.6M).

Long Term Liabilities: WEIR's short term assets (£1.9B) exceed its long term liabilities (£1.8B).


Debt to Equity History and Analysis

Debt Level: WEIR's debt to equity ratio (86.2%) is considered high.

Reducing Debt: WEIR's debt to equity ratio has increased from 56.6% to 86.2% over the past 5 years.

Debt Coverage: WEIR's debt is not well covered by operating cash flow (6%).

Interest Coverage: WEIR's interest payments on its debt are well covered by EBIT (7x coverage).


Balance Sheet

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

Debt Coverage by Assets: WEIR's debt is covered by short term assets (assets are 1.1x debt).


Next Steps

Dividend

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

3.33%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%1.8%markettop25%5.0%industryaverage2.6%forecastin3Years3.7%

Current dividend yield vs market & industry

Notable Dividend: WEIR's dividend (3.08%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: WEIR's dividend (3.08%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

Stable Dividend: WEIR's dividends per share have been stable in the past 10 years.

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


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (182.5%), WEIR's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: WEIR's dividends in 3 years are forecast to be well covered by earnings (45.8% payout ratio).


Next Steps

Management

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

3.3yrs

Average management tenure


CEO

Jon Stanton (52yo)

3.3yrs

Tenure

UK£2,270,494

Compensation

Mr. Jonathan Stanton, also known as Jon, has been the Chief Executive Officer of The Weir Group PLC since October 1, 2016 and served as its Group Finance Director from April 2010 to October 3, 2016. He ser ...


CEO Compensation Analysis

Compensation vs Market: Jon's total compensation ($USD2.98M) is above average for companies of similar size in the UK market ($USD2.20M).

Compensation vs Earnings: Jon's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

3.3yrs

Average Tenure

Experienced Management: WEIR's management team is considered experienced (3.3 years average tenure).


Board Age and Tenure

5.0yrs

Average Tenure

63yo

Average Age

Experienced Board: WEIR's board of directors are considered experienced (5 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.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 14.2%.


Management Team

  • Jon Owens

    President of the ESCO Division

    • Tenure: 1.5yrs
  • Graham Vanhegan

    Company Secretary & Chief Legal Officer

    • Tenure: 1.8yrs
  • Jon Stanton (52yo)

    CEO & Director

    • Tenure: 3.3yrs
    • Compensation: UK£2.27m
  • John Heasley (44yo)

    CFO & Director

    • Tenure: 3.3yrs
    • Compensation: UK£1.33m
  • Garry Fingland

    Chief Information Officer

    • Tenure: 0.8yrs
  • David Kyles

    Head of Internal Audit

    • Tenure: 4.1yrs
  • Stephen Christie

    Head of Investor Relations

    • Tenure: 5.4yrs
  • Raymond Buchanan

    Head of Communications & Public Affairs

    • Tenure: 6.3yrs
  • Rosemary McGinness

    Chief People Officer

    • Tenure: 2.5yrs
  • Paula Cousins

    Chief Strategy & Sustainability Officer


    Board Members

    • Barbara Jeremiah (67yo)

      Senior Independent Director

      • Compensation: UK£60.78k
    • Charles Berry (67yo)

      Independent Chairman

      • Tenure: 6yrs
      • Compensation: UK£306.58k
    • Jim McDonald (62yo)

      Non-Executive Director & Member of Technology Advisory Board

      • Tenure: 5yrs
      • Compensation: UK£60.78k
    • Mary Jacobi (67yo)

      Non-Executive Director

      • Tenure: 6yrs
      • Compensation: UK£62.11k
    • Rick Menell (64yo)

      Independent Director

      • Tenure: 10.8yrs
      • Compensation: UK£73.50k
    • Clare Chapman (59yo)

      Non-Executive Director

      • Tenure: 2.4yrs
      • Compensation: UK£76.58k
    • Stephen Young (63yo)

      Non-Executive Director

      • Tenure: 2yrs
      • Compensation: UK£71.41k
    • Jon Stanton (52yo)

      CEO & Director

      • Tenure: 3.3yrs
      • Compensation: UK£2.27m
    • John Heasley (44yo)

      CFO & Director

      • Tenure: 3.3yrs
      • Compensation: UK£1.33m
    • Jackie Mutschler

      Member of Technology Advisory Board

      • Tenure: 5yrs

    Company Information

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


    Key Information

    • Name: The Weir Group PLC
    • Ticker: WEIR
    • Exchange: LSE
    • Founded: 1871
    • Industry: Industrial Machinery
    • Sector: Capital Goods
    • Market Cap: UK£3.592b
    • Shares outstanding: 258.98m
    • Website: https://www.global.weir

    Number of Employees


    Location

    • The Weir Group PLC
    • 1 West Regent Street
    • Glasgow
    • G2 1RW
    • United Kingdom

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    WEIG.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJun 1993
    WEIRLSE (London Stock Exchange)YesOrdinary SharesGBGBPJun 1993
    42WDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJun 1993
    WEIRLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJun 1993
    WEIR NBMV (Bolsa Mexicana de Valores)YesOrdinary SharesMXMXNJun 1993
    WEGR.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDJan 2012

    Biography

    The Weir Group PLC designs, manufactures, and sells highly-engineered products and services worldwide. It operates through three segments: Minerals, ESCO, and Oil & Gas. The Minerals segment offers slurry handling equipment and associated aftermarket support services for abrasive high-wear applications used in the mining and oil sands markets. The ESCO segment provides ground engaging tools for surface mining and infrastructure. The Oil & Gas segment offers products and service solutions to upstream, production, transportation, and related industries. The company offers its products under the Allen Steam Turbines, Aspir, Atwood & Morrill, AutoTork, Batley Valve, BDK, Begemann, Blakeborough, Cavex, Delta Industrial, Enduron, Floway, FusionCast, Gabbioneta, GEHO, Gemex, Hazleton, Hopkinsons, Hydrau-Flo, Isogate, Lewis, Linatex, Mathena, Multiflo, Novatech, Roto-Jet, Sarasin-RSBD, Seaboard, SEBIM, SPM, Stampede, Synertrex, Tricentric, Trio, Vulco, Warman, WEMCO, and WSP brand names. The Weir Group PLC was founded in 1871 and is headquartered in Glasgow, the United Kingdom. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/24 20:35
    End of Day Share Price2020/01/24 00:00
    Earnings2019/06/30
    Annual Earnings2018/12/31


    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.