Restore (AIM:RST) - Share price, News & Analysis

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

RST (£4.24) is trading below our estimate of [[fair value]] (£5.69)

RST fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	2/6
Past Performance	4/6
Financial Health	5/6
Dividends	4/6

RST Stock Overview

Restore plc, together with its subsidiaries, provides offices and workplaces services to the public and private sectors primarily in the United Kingdom.

Rewards

Trading at 25.5% below our estimate of its fair value

Earnings are forecast to grow 6.88% per year

Earnings grew by 178.9% over the past year

Risk Analysis

Unstable dividend track record

Restore Competitors

Johnson Service Group

AIM:JSG

UK£519.4m

Mears Group

LSE:MER

UK£225.2m

Sureserve Group

AIM:SUR

UK£139.2m

Inspired

AIM:INSE

UK£119.9m

Price History & Performance

Summary of all time highs, changes and price drops for Restore
Historical stock prices
Current Share Price	UK£4.24
52 Week High	UK£5.30
52 Week Low	UK£3.90
Beta	0.79
1 Month Change	-2.30%
3 Month Change	-0.94%
1 Year Change	-16.54%
3 Year Change	-3.86%
5 Year Change	-13.38%
Change since IPO	-3.09%

Shareholder Returns

	RST	GB Commercial Services	GB Market
7D	-5.8%	0.09%	0.5%
1Y	-16.5%	2.4%	-6.8%

Return vs Industry: RST underperformed the UK Commercial Services industry which returned 2.4% over the past year.

Return vs Market: RST underperformed the UK Market which returned -6.8% over the past year.

Price Volatility

Is RST's price volatile compared to industry and market?
RST volatility
RST Average Weekly Movement	4.1%
Commercial Services Industry Average Movement	5.0%
Market Average Movement	5.4%
10% most volatile stocks in GB Market	10.7%
10% least volatile stocks in GB Market	2.7%

Stable Share Price: RST is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: RST's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2004	2,760	Charles Bligh	https://www.restoreplc.com

Restore plc, together with its subsidiaries, provides offices and workplaces services to the public and private sectors primarily in the United Kingdom. The company operates through two segments, Digital & Information Management, and Secure Lifecycle Services. The Digital & Information Management segment offers storage and retrieval solutions for hard copy documents, magnetic data storage tapes, and heritage assets; digital workflow services, including document scanning, workflow automation, cloud-based document management systems, robotic process automation, and artificial intelligence.

Restore Fundamentals Summary

How do Restore's earnings and revenue compare to its market cap?
RST fundamental statistics
Market Cap	UK£579.50m
Earnings (TTM)	UK£19.80m
Revenue (TTM)	UK£268.50m

29.3x

P/E Ratio

2.2x

P/S Ratio

Is RST overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
RST income statement (TTM)
Revenue	UK£268.50m
Cost of Revenue	UK£147.50m
Gross Profit	UK£121.00m
Other Expenses	UK£101.20m
Earnings	UK£19.80m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.14
Gross Margin	45.07%
Net Profit Margin	7.37%
Debt/Equity Ratio	49.2%

How did RST perform over the long term?

See historical performance and comparison

Dividends

2.2%

Current Dividend Yield

50%

Payout Ratio

Does RST pay a reliable dividends?

See RST dividend history and benchmarks

When do you need to buy RST by to receive an upcoming dividend?
Restore dividend dates
Ex Dividend Date	Sep 15 2022
Dividend Pay Date	Oct 14 2022
Days until Ex dividend	38 days
Days until Dividend pay date	67 days

Does RST pay a reliable dividends?

See RST dividend history and benchmarks

We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings 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 RST?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for RST. This is calculated by dividing RST's market cap by their current preferred multiple.
What is RST's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£579.50m

RST 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	2.9x
Enterprise Value/EBITDA	13x
PEG Ratio	4.3x

Price to Earnings Ratio vs Peers

How does RST's PE Ratio compare to its peers?

RST PE Ratio vs Peers

The above table shows the PE ratio for RST vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	42.4x
JSG Johnson Service Group	75.3x	31.5%	UK£519.4m
MER Mears Group	9.9x	4.9%	UK£225.2m
SUR Sureserve Group	11.3x	n/a	UK£139.2m
INSE Inspired	73.2x	45.5%	UK£119.9m
RST Restore	29.3x	6.9%	UK£579.5m

Price-To-Earnings vs Peers: RST is good value based on its Price-To-Earnings Ratio (29.3x) compared to the peer average (42.4x).

Price to Earnings Ratio vs Industry

How does RST's PE Ratio compare vs other companies in the GB Commercial Services Industry?

Price-To-Earnings vs Industry: RST is good value based on its Price-To-Earnings Ratio (29.3x) compared to the UK Commercial Services industry average (30.2x)

Price to Earnings Ratio vs Fair Ratio

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

RST PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	29.3x
Fair PE Ratio	22.3x

Price-To-Earnings vs Fair Ratio: RST is expensive based on its Price-To-Earnings Ratio (29.3x) compared to the estimated Fair Price-To-Earnings Ratio (22.3x).

Share Price vs Fair Value

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

Below Fair Value: RST (£4.24) is trading below our estimate of fair value (£5.69)

Significantly Below Fair Value: RST 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 and analysts are within a statistically confident range of agreement.

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Future Growth

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

Future Growth Score

2/6

Future Growth Score 2/6

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

6.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: RST's forecast earnings growth (6.9% per year) is above the savings rate (0.9%).

Earnings vs Market: RST's earnings (6.9% per year) are forecast to grow slower than the UK market (10% per year).

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

Revenue vs Market: RST's revenue (4.3% per year) is forecast to grow faster than the UK market (4.1% per year).

High Growth Revenue: RST'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: RST's Return on Equity is forecast to be low in 3 years time (13.1%).

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Past Performance

How has Restore performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

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

-4.5%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RST has high quality earnings.

Growing Profit Margin: RST's current net profit margins (7.4%) are higher than last year (3.6%).

Past Earnings Growth Analysis

Earnings Trend: RST's earnings have declined by 4.5% per year over the past 5 years.

Accelerating Growth: RST's earnings growth over the past year (178.9%) exceeds its 5-year average (-4.5% per year).

Earnings vs Industry: RST earnings growth over the past year (178.9%) exceeded the Commercial Services industry 139.1%.

Return on Equity

High ROE: RST's Return on Equity (7.3%) is considered low.

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Financial Health

How is Restore's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

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

Financial Position Analysis

Short Term Liabilities: RST's short term assets (£104.8M) exceed its short term liabilities (£79.9M).

Long Term Liabilities: RST's short term assets (£104.8M) do not cover its long term liabilities (£261.9M).

Debt to Equity History and Analysis

Debt Level: RST's net debt to equity ratio (38.2%) is considered satisfactory.

Reducing Debt: RST's debt to equity ratio has reduced from 62.1% to 49.2% over the past 5 years.

Debt Coverage: RST's debt is well covered by operating cash flow (35.9%).

Interest Coverage: RST's interest payments on its debt are well covered by EBIT (5.8x coverage).

Balance Sheet

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Dividend

What is Restore current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

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

2.22%

Current Dividend Yield

Upcoming Dividend Payment

Dividend Yield vs Market

Notable Dividend: RST's dividend (2.22%) is higher than the bottom 25% of dividend payers in the UK market (1.87%).

High Dividend: RST's dividend (2.22%) is low compared to the top 25% of dividend payers in the UK market (5.13%).

Stability and Growth of Payments

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

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

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (50.4%), RST's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (34.9%), RST's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

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

2.9yrs

Average management tenure

CEO

Charles Bligh (54 yo)

3.33yrs

Tenure

UK£998,000

Compensation

Mr. Charles Edward Bligh is Chief Executive Officer at Restore plc since April 1, 2019. Mr. Bligh had been the Chief Operating Officer at TalkTalk Telecom Group PLC since May 2017 until June 30, 2018. Mr....

CEO Compensation Analysis

Compensation vs Market: Charles's total compensation ($USD1.20M) is about average for companies of similar size in the UK market ($USD1.35M).

Compensation vs Earnings: Charles's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: RST's management team is considered experienced (2.9 years average tenure).

Board Members

Experienced Board: RST's board of directors are considered experienced (3.1 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: RST 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	2022/08/07 00:00
End of Day Share Price	2022/08/05 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31