LSE:CPI

Stock Analysis Report

Executive Summary

Capita plc provides customer management, administration, and professional support services to clients in the private and public sectors.

Snowflake

Fundamentals

Undervalued with reasonable growth potential.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-3.1%

CPI

1.2%

GB Professional Services

-0.3%

GB Market


1 Year Return

20.7%

CPI

17.8%

GB Professional Services

3.9%

GB Market

Return vs Industry: CPI exceeded the UK Professional Services industry which returned 17.8% over the past year.

Return vs Market: CPI exceeded the UK Market which returned 3.9% over the past year.


Shareholder returns

CPIIndustryMarket
7 Day-3.1%1.2%-0.3%
30 Day-5.4%0.8%1.8%
90 Day21.6%-1.9%4.9%
1 Year20.7%20.7%20.6%17.8%9.3%3.9%
3 Year-54.5%-73.8%61.0%49.4%23.2%7.6%
5 Year-73.5%-85.7%110.2%85.5%34.3%3.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

40.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CPI (£1.52) is trading below our estimate of fair value (£2.58)

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


Price To Earnings Ratio

PE vs Industry: CPI is good value based on its PE Ratio (11.3x) compared to the Professional Services industry average (20.8x).

PE vs Market: CPI is good value based on its PE Ratio (11.3x) compared to the UK market (16.9x).


Price to Earnings Growth Ratio

PEG Ratio: CPI is good value based on its PEG Ratio (0.5x)


Price to Book Ratio

PB vs Industry: CPI is overvalued based on its PB Ratio (1402.9x) compared to the GB Professional Services industry average (2.9x).


Next Steps

Future Growth

How is Capita forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

21.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CPI's forecast earnings growth (21.3% per year) is above the savings rate (1.2%).

Earnings vs Market: CPI's earnings (21.3% per year) are forecast to grow faster than the UK market (12.6% per year).

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

Revenue vs Market: CPI's revenue (2% per year) is forecast to grow slower than the UK market (3.8% per year).

High Growth Revenue: CPI's revenue (2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CPI's Return on Equity is forecast to be very high in 3 years time (97.3%).


Next Steps

Past Performance

How has Capita performed over the past 5 years?

-30.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CPI has large one-off items impacting its financial results.

Growing Profit Margin: CPI's current net profit margins (6%) are higher than last year (-11.4%).


Past Earnings Growth Analysis

Earnings Trend: CPI's earnings have declined by -30.6% per year over the past 5 years.

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

Earnings vs Industry: CPI has become profitable in the last year, making it difficult to compare its past year earnings growth to the Professional Services industry (12.5%).


Return on Equity

High ROE: Whilst CPI's Return on Equity (324.06%) is outstanding, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Capita's financial position?


Financial Position Analysis

Short Term Liabilities: CPI's short term assets (£1.7B) do not cover its short term liabilities (£2.6B)

Long Term Liabilities: CPI's short term assets (1.7B) do not cover its long term liabilities (1.8B)


Debt to Equity History and Analysis

Debt Level: CPI's debt to equity ratio (2027.3%) is considered high

Reducing Debt: CPI's debt to equity ratio has increased from 258.1% to 2027.3% over the past 5 years.

Debt Coverage: CPI's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: CPI's interest payments on its debt are not well covered by EBIT (2.3x coverage).


Balance Sheet

Inventory Level: CPI has a low level of unsold assets or inventory.

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


Next Steps

Dividend

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

0.70%

Forecast Dividend Yield


Dividend Yield vs Market

company0%marketbottom25%2.0%markettop25%5.3%industryaverage2.2%forecastin3Years0.7%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate CPI's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate CPI's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CPI's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CPI's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: CPI is not paying a notable dividend for the UK market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of CPI's dividend in 3 years as they are not forecast to pay a notable one for the UK market.


Next Steps

Management

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

1.8yrs

Average management tenure


CEO

Jon Lewis (58yo)

1.9yrs

Tenure

UK£2,014,209

Compensation

Dr. Jonathan Lewis, also known as Jon, has been Director at Statoil ASA since July 01, 2018. He has been the Chief Executive Officer of Capita plc since December 1, 2017. Dr. Lewis served as the Chief Exec ...


CEO Compensation Analysis

Compensation vs Market: Jon's total compensation ($USD2.59M) is about average for companies of similar size in the UK market ($USD2.18M).

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


Management Age and Tenure

1.8yrs

Average Tenure

52yo

Average Age

Experienced Management: CPI's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Age and Tenure

2.3yrs

Average Tenure

56yo

Average Age

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


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

BuyUK£12,09108 Apr 19
John Cresswell
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares10,000
Max PriceUK£1.21
BuyUK£17305 Dec 18
Jonathan Lewis
EntityIndividual
Role
Chief Executive Officer
CEO & Director
Shares162
Max PriceUK£1.07

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 73.1%.


Management Team

  • Shona Nichols

    Executive Director of Communications

    • Tenure: 0yrs
  • Simon Butcher (51yo)

    CFO & Executive Director

    • Tenure: 0.8yrs
  • Jon Lewis (58yo)

    CEO & Director

    • Tenure: 1.9yrs
    • Compensation: UK£2.01m
  • Andrew Ripper

    Head of Investor Relations

    • Tenure: 0yrs
  • Will Serle

    Chief People Officer

    • Tenure: 1.6yrs
  • Claire Chapman (52yo)

    Chief General Counsel

    • Tenure: 1.8yrs
  • Dave Spencer

    Managing Director for Real Estate & Infrastructure Business

    • Tenure: 2.4yrs
  • Ismail Amla

    Chief Growth Officer

    • Tenure: 0.9yrs
  • Rupert Green

    Chief Corporate Development Officer

    • Tenure: 0yrs
  • Mark Brown

    Chief Information Officer

    • Tenure: 2.7yrs

Board Members

  • Andrew Williams (52yo)

    Non-Executive Director

    • Tenure: 4.8yrs
    • Compensation: UK£64.65k
  • Baroness Neville-Rolfe (66yo)

    Independent Non-Executive Director

    • Tenure: 1.9yrs
    • Compensation: UK£64.51k
  • Simon Butcher (51yo)

    CFO & Executive Director

    • Tenure: 0.8yrs
  • Jon Lewis (58yo)

    CEO & Director

    • Tenure: 1.9yrs
    • Compensation: UK£2.01m
  • Georgina Harvey (54yo)

    Independent Non-Executive Director

    • Tenure: 0.08yrs
  • John Cresswell (58yo)

    Non-Executive Director

    • Tenure: 4yrs
    • Compensation: UK£64.73k
  • Matthew Lester (56yo)

    Non-Executive Director

    • Tenure: 2.7yrs
    • Compensation: UK£65.27k
  • Ian Powell

    Non-Executive Chairman

    • Tenure: 2.8yrs
    • Compensation: UK£325.35k
  • Gillian Sheldon

    Senior Independent Director

    • Tenure: 6.8yrs
    • Compensation: UK£75.15k
  • Joseph Murphy

    Non-Executive Director

    • Tenure: 0.3yrs

Company Information

Capita plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Capita plc
  • Ticker: CPI
  • Exchange: LSE
  • Founded: 1984
  • Industry: Human Resource and Employment Services
  • Sector: Commercial Services
  • Market Cap: UK£2.523b
  • Shares outstanding: 1.66b
  • Website: https://www.capita.com

Number of Employees


Location

  • Capita plc
  • 30 Berners Street
  • London
  • Greater London
  • W1T 3LR
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CTAG.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
CPILSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
CTAADB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
CPILBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
CTAG.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDOct 2008

Biography

Capita plc provides customer management, administration, and professional support services to clients in the private and public sectors. The company offers automation, business transformation, customer man ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/11/12 20:59
End of Day Share Price2019/11/12 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.