Science Group (AIM:SAG) - Share price, News & Analysis

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

SAG (£4.15) is trading below our estimate of [[fair value]] (£9.26)

SAG fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	1/6
Past Performance	2/6
Financial Health	6/6
Dividends	2/6

SAG Stock Overview

Science Group plc, together with its subsidiaries, provides science and technology-based consultancy services in the United Kingdom, North America, Europe, and internationally.

Rewards

Trading at 55.2% below our estimate of its fair value

Earnings are forecast to grow 7.18% per year

Risk Analysis

Shareholders have been diluted in the past year

Science Group Competitors

Keystone Law Group

AIM:KEYS

UK£175.1m

Fintel

AIM:FNTL

UK£195.4m

Gateley (Holdings)

AIM:GTLY

UK£243.1m

DWF Group

LSE:DWF

UK£291.4m

Price History & Performance

Summary of all time highs, changes and price drops for Science Group
Historical stock prices
Current Share Price	UK£4.15
52 Week High	UK£5.00
52 Week Low	UK£3.40
Beta	0.73
1 Month Change	5.06%
3 Month Change	5.06%
1 Year Change	-6.74%
3 Year Change	121.33%
5 Year Change	109.60%
Change since IPO	822.22%

Shareholder Returns

	SAG	GB Professional Services	GB Market
7D	1.2%	-1.1%	-0.2%
1Y	-6.7%	-3.5%	-9.0%

Return vs Industry: SAG underperformed the UK Professional Services industry which returned -3.4% over the past year.

Return vs Market: SAG exceeded the UK Market which returned -8.2% over the past year.

Price Volatility

Is SAG's price volatile compared to industry and market?
SAG volatility
SAG Average Weekly Movement	3.0%
Professional Services Industry Average Movement	4.1%
Market Average Movement	5.3%
10% most volatile stocks in GB Market	10.9%
10% least volatile stocks in GB Market	2.7%

Stable Share Price: SAG is less volatile than 75% of UK stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: SAG's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2008	422	Dan Edwards	https://www.sciencegroup.com

Science Group plc, together with its subsidiaries, provides science and technology-based consultancy services in the United Kingdom, North America, Europe, and internationally. The company operates through R&D Consultancy; Regulatory & Compliance; and Frontier Smart Technologies divisions. It offers product and technology development, scientific and regulatory advice, and registration and compliance services to medical, food and beverage, consumer, industrial, chemical, and energy sectors.

Science Group Fundamentals Summary

How do Science Group's earnings and revenue compare to its market cap?
SAG fundamental statistics
Market Cap	UK£188.26m
Earnings (TTM)	UK£9.53m
Revenue (TTM)	UK£85.34m

19.8x

P/E Ratio

2.2x

P/S Ratio

Is SAG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SAG income statement (TTM)
Revenue	UK£85.34m
Cost of Revenue	UK£48.35m
Gross Profit	UK£37.00m
Other Expenses	UK£27.47m
Earnings	UK£9.53m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.21
Gross Margin	43.35%
Net Profit Margin	11.16%
Debt/Equity Ratio	20.9%

How did SAG perform over the long term?

See historical performance and comparison

Dividends

1.2%

Current Dividend Yield

24%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

2/6

Valuation Score 2/6

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 SAG?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SAG. This is calculated by dividing SAG's market cap by their current preferred multiple.
What is SAG's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£188.26m

SAG 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	2x
Enterprise Value/EBITDA	9.6x
PEG Ratio	2.8x

Price to Earnings Ratio vs Peers

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

SAG PE Ratio vs Peers

The above table shows the PE ratio for SAG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	17.6x
KEYS Keystone Law Group	26.3x	2.4%	UK£175.1m
FNTL Fintel	12.7x	-8.3%	UK£195.4m
GTLY Gateley (Holdings)	17x	7.1%	UK£243.1m
DWF DWF Group	14.4x	17.4%	UK£291.4m
SAG Science Group	19.8x	7.2%	UK£188.3m

Price-To-Earnings vs Peers: SAG is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the peer average (17.6x).

Price to Earnings Ratio vs Industry

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

Price-To-Earnings vs Industry: SAG is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the UK Professional Services industry average (17.8x)

Price to Earnings Ratio vs Fair Ratio

What is SAG'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.

SAG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	19.8x
Fair PE Ratio	18.9x

Price-To-Earnings vs Fair Ratio: SAG is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the estimated Fair Price-To-Earnings Ratio (18.9x).

Share Price vs Fair Value

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

Below Fair Value: SAG (£4.15) is trading below our estimate of fair value (£9.26)

Significantly Below Fair Value: SAG 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 there are not enough analysts covering the stock to determine statistical confidence in agreement.

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Future Growth

How is Science Group forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

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

7.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SAG's forecast earnings growth (7.2% per year) is above the savings rate (0.9%).

Earnings vs Market: SAG's earnings (7.2% per year) are forecast to grow slower than the UK market (9.8% per year).

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

Revenue vs Market: SAG's revenue (1.3% per year) is forecast to grow slower than the UK market (4.6% per year).

High Growth Revenue: SAG's revenue (1.3% 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 SAG's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Science Group performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

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

26.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SAG has high quality earnings.

Growing Profit Margin: SAG's current net profit margins (11.2%) are lower than last year (12.5%).

Past Earnings Growth Analysis

Earnings Trend: SAG's earnings have grown significantly by 26.7% per year over the past 5 years.

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

Earnings vs Industry: SAG had negative earnings growth (-1.9%) over the past year, making it difficult to compare to the Professional Services industry average (49.8%).

Return on Equity

High ROE: SAG's Return on Equity (13.5%) is considered low.

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Financial Health

How is Science Group's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

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

Financial Position Analysis

Short Term Liabilities: SAG's short term assets (£56.6M) exceed its short term liabilities (£33.5M).

Long Term Liabilities: SAG's short term assets (£56.6M) exceed its long term liabilities (£16.5M).

Debt to Equity History and Analysis

Debt Level: SAG has more cash than its total debt.

Reducing Debt: SAG's debt to equity ratio has reduced from 38.6% to 20.9% over the past 5 years.

Debt Coverage: SAG's debt is well covered by operating cash flow (109.2%).

Interest Coverage: SAG's interest payments on its debt are well covered by EBIT (21.5x coverage).

Balance Sheet

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Dividend

What is Science Group 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

1.20%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: SAG's dividend (1.2%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.86%).

High Dividend: SAG's dividend (1.2%) is low compared to the top 25% of dividend payers in the UK market (5.13%).

Stability and Growth of Payments

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

Growing Dividend: SAG's dividend payments have increased, but the company has only paid a dividend for 9 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (23.5%), SAG's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (19.5%), SAG's dividend payments are well covered by cash flows.

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Management

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

6.1yrs

Average management tenure

CEO

Dan Edwards (47 yo)

no data

Tenure

UK£511,000

Compensation

Mr. Daniel Robert Morgan Edwards, also known as Dan, serves as Group Managing Director at Science Group plc and serves as its Director since April 24, 2019. Mr Edwards joined the Science Group plc in 2004...

CEO Compensation Analysis

Compensation vs Market: Dan's total compensation ($USD615.52K) is about average for companies of similar size in the UK market ($USD711.48K).

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

Leadership Team

Experienced Management: SAG's management team is seasoned and experienced (6.1 years average tenure).

Board Members

Experienced Board: SAG's board of directors are not considered experienced ( 2.8 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 been diluted in the past year, with total shares outstanding growing by 10.3%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/17 00:00
End of Day Share Price	2022/08/17 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31