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 Analysis

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

1.2%

CPI

0.1%

GB Professional Services

0.3%

GB Market


1 Year Return

31.6%

CPI

22.2%

GB Professional Services

6.5%

GB Market

Return vs Industry: CPI exceeded the UK Professional Services industry which returned 22.2% over the past year.

Return vs Market: CPI exceeded the UK Market which returned 6.5% over the past year.


Shareholder returns

CPIIndustryMarket
7 Day1.2%0.1%0.3%
30 Day-4.8%1.5%-1.4%
90 Day-6.8%9.3%2.9%
1 Year31.6%31.6%25.0%22.2%12.0%6.5%
3 Year-52.8%-72.8%58.3%47.6%18.7%3.8%
5 Year-76.4%-87.2%116.7%91.4%35.0%4.1%

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?

43.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CPI (£1.52) is trading below our estimate of fair value (£2.67)

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 (11.2x) compared to the Professional Services industry average (22.1x).

PE vs Market: CPI is good value based on its PE Ratio (11.2x) compared to the UK market (18.6x).


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 (1395.5x) 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?

21.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CPI's forecast earnings growth (21.5% per year) is above the savings rate (0.5%).

Earnings vs Market: CPI's earnings (21.5% per year) are forecast to grow faster than the UK market (12.9% per year).

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

Revenue vs Market: CPI's revenue (2.4% per year) is forecast to grow slower than the UK market (3.6% per year).

High Growth Revenue: CPI's revenue (2.4% 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 (95.1%).


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 a high level of non-cash earnings.

Growing Profit Margin: CPI became profitable in the past.


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 (18.3%).


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?

1.07%

Forecast Dividend Yield


Dividend Yield vs Market

company0%marketbottom25%1.8%markettop25%5.1%industryaverage2.0%forecastin3Years1.1%

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

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

2.1yrs

Average management tenure


CEO

Jon Lewis (58yo)

2.2yrs

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 ($USD2.61M) is about average for companies of similar size in the UK market ($USD2.27M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Jonathan Lewis
CEO & Director2.2yrsUK£2.01m0.024% £612.1k
Simon Butcher
CFO & Executive Director1.1yrsno data0.0073% £183.7k
Mark Brown
Chief Information Officer2.9yrsno datano data
Stuart Morgan
Director of Investor Relations0yrsno datano data
Claire Chapman
Chief General Counsel2.1yrsno datano data
Shona Nichols
Executive Director of Communications0yrsno datano data
Rupert Green
Chief Corporate Development Officer0yrsno datano data
William Serle
Chief People Officer1.8yrsno datano data
David Spencer
Managing Director for Real Estate & Infrastructure Business2.7yrsno datano data
Ismail Amla
Chief Growth Officer1.2yrsno datano data

2.1yrs

Average Tenure

52yo

Average Age

Experienced Management: CPI's management team is considered experienced (2.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Jonathan Lewis
CEO & Director2.2yrsUK£2.01m0.024% £612.1k
Simon Butcher
CFO & Executive Director1.1yrsno data0.0073% £183.7k
Andrew Williams
Non-Executive Director5.1yrsUK£64.65k0.0060% £151.6k
Baroness Neville-Rolfe
Independent Non-Executive Director2.2yrsUK£64.51k0.00084% £21.1k
Georgina Harvey
Independent Non-Executive Director0.3yrsno datano data
John Cresswell
Non-Executive Director4.3yrsUK£64.73k0.0012% £31.1k
Matthew Lester
Non-Executive Director2.9yrsUK£65.27k0.0013% £32.9k
Ian Powell
Non-Executive Chairman3.1yrsUK£325.35k0.0018% £45.4k
Gillian Sheldon
Senior Independent Director7.1yrsUK£75.15k0.00075% £18.8k
Joseph Murphy
Employee Non-Executive Director0.6yrsno data0.00010% £2.5k

2.5yrs

Average Tenure

56yo

Average Age

Experienced Board: CPI's board of directors are not considered experienced ( 2.5 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 substantially diluted in the past year, with total shares outstanding growing by 73.1%.


Top Shareholders

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£2.510b
  • 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 management, data and analytics, digital transformation, government, IT and networks, people, and software solutions and services, as well as specialist services, such as intelligent communications, financial, legal, travel and event, start-up development, property and infrastructure, procurement, and translation and interpreting, and workplace technology services. Capita plc provides its services to banking and financial services, insurance, life and pensions, retail, telecoms and media, transport, utilities, central and local government, defense, education, emergency services, health, police and justice, and science sectors. The company operates in the United Kingdom, Ireland, Northern Europe, the United States, India, South Africa, and Dubai. The company was formerly known as The Capita Group plc and changed its name to Capita plc in January 2012. Capita plc was founded in 1984 and is headquartered in London, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/23 21:48
End of Day Share Price2020/02/21 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.