LSE:GFS

Stock Analysis Report

Executive Summary

G4S plc, together with its subsidiaries, provides security and related services in Africa, the Americas, Asia, Europe, and the Middle East.

Rewards

Trading at 4.9% below its fair value

Earnings are forecast to grow 22.13% per year

Pays a reliable dividend of 4.83%

Risk Analysis

Debt is not well covered by operating cash flow

Dividend of 4.83% is not well covered by earnings

Large one-off items impacting financial results

Profit margins (0.5%) are lower than last year (2.5%)



Snowflake Analysis

Reasonable growth potential average dividend payer.


Similar Companies

Share Price & News

How has G4S's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

2.2%

GFS

-1.5%

GB Commercial Services

-0.2%

GB Market


1 Year Return

-2.0%

GFS

22.5%

GB Commercial Services

6.1%

GB Market

Return vs Industry: GFS underperformed the UK Commercial Services industry which returned 22.5% over the past year.

Return vs Market: GFS underperformed the UK Market which returned 6.1% over the past year.


Shareholder returns

GFSIndustryMarket
7 Day2.2%-1.5%-0.2%
30 Day-4.0%-2.7%-2.7%
90 Day-2.6%6.1%3.9%
1 Year2.9%-2.0%26.1%22.5%11.8%6.1%
3 Year-13.0%-22.8%24.5%13.9%17.5%2.6%
5 Year-13.5%-29.2%33.7%12.1%34.8%3.7%

Price Volatility Vs. Market

How volatile is G4S's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is G4S undervalued compared to its fair value and its price relative to the market?

4.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: GFS (£2.01) is trading below our estimate of fair value (£2.11)

Significantly Below Fair Value: GFS is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: GFS is poor value based on its PE Ratio (81.8x) compared to the Commercial Services industry average (19.3x).

PE vs Market: GFS is poor value based on its PE Ratio (81.8x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: GFS is poor value based on its PEG Ratio (3.7x)


Price to Book Ratio

PB vs Industry: GFS is overvalued based on its PB Ratio (5.3x) compared to the GB Commercial Services industry average (2.2x).


Next Steps

Future Growth

How is G4S forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

22.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GFS's forecast earnings growth (22.1% per year) is above the savings rate (0.5%).

Earnings vs Market: GFS's earnings (22.1% per year) are forecast to grow faster than the UK market (12.2% per year).

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

Revenue vs Market: GFS's revenue (2.5% per year) is forecast to grow slower than the UK market (3.4% per year).

High Growth Revenue: GFS's revenue (2.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GFS's Return on Equity is forecast to be high in 3 years time (29.9%)


Next Steps

Past Performance

How has G4S performed over the past 5 years?

29.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GFS has a large one-off loss of £218.0M impacting its June 30 2019 financial results.

Growing Profit Margin: GFS's current net profit margins (0.5%) are lower than last year (2.5%).


Past Earnings Growth Analysis

Earnings Trend: GFS has become profitable over the past 5 years, growing earnings by 29.8% per year.

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

Earnings vs Industry: GFS had negative earnings growth (-79.9%) over the past year, making it difficult to compare to the Commercial Services industry average (17.1%).


Return on Equity

High ROE: GFS's Return on Equity (8.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is G4S's financial position?


Financial Position Analysis

Short Term Liabilities: GFS's short term assets (£2.7B) exceed its short term liabilities (£1.9B).

Long Term Liabilities: GFS's short term assets (£2.7B) do not cover its long term liabilities (£3.4B).


Debt to Equity History and Analysis

Debt Level: GFS's debt to equity ratio (435.2%) is considered high.

Reducing Debt: GFS's debt to equity ratio has increased from 253.5% to 435.2% over the past 5 years.

Debt Coverage: GFS's debt is not well covered by operating cash flow (9.5%).

Interest Coverage: GFS's interest payments on its debt are well covered by EBIT (4.6x coverage).


Balance Sheet

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

Debt Coverage by Assets: GFS's debt is not covered by short term assets (assets are 1x debt).


Next Steps

Dividend

What is G4S's current dividend yield, its reliability and sustainability?

4.83%

Current Dividend Yield


Dividend Yield vs Market

company4.8%marketbottom25%1.8%markettop25%5.1%industryaverage2.7%forecastin3Years5.1%

Current dividend yield vs market & industry

Notable Dividend: GFS's dividend (4.83%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: GFS's dividend (4.83%) is low compared to the top 25% of dividend payers in the UK market (5.1%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (394.8%), GFS's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GFS's dividends in 3 years are forecast to be covered by earnings (53.2% payout ratio).


Next Steps

Management

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

5.0yrs

Average management tenure


CEO

Ashley Almanza (56yo)

6.7yrs

Tenure

UK£2,930,243

Compensation

Mr. Ashley Almanza has been the Chief Executive Officer of G4S Australia Holdings Pty. Ltd since June 1, 2013. Mr. Almanza has been the Group Chief Executive Officer of G4S plc since June 1, 2013. He has b ...


CEO Compensation Analysis

Compensation vs Market: Ashley's total compensation ($USD3.82M) is above average for companies of similar size in the UK market ($USD2.22M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Ashley Almanza
CEO & Executive Director6.7yrsUK£2.93m0.12% £3.7m
Tim Weller
CFO & Executive Director6.8yrsUK£1.97m0.025% £790.6k
Helen Parris
Director of Investor Relations0yrsno datano data
Søren Lundsberg-Nielsen
Group General Counsel19.1yrsno datano data
Sophie McMillan
Head of Media0yrsno datano data
Stephane Verdoy
Group Sales & Marketing Director2yrsno datano data
Jenni Myles
Group Human Resources Director4.6yrsno datano data
Graham Levinsohn
Regional Chief Executive Officer of Europe & the Middle East6.3yrsno datano data
John Kenning
Regional Chief Executive Officer of the Americas5.3yrsno datano data
Mel Brooks
Regional President of Africa4.8yrsno datano data

5.0yrs

Average Tenure

56yo

Average Age

Experienced Management: GFS's management team is seasoned and experienced (5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Ashley Almanza
CEO & Executive Director6.7yrsUK£2.93m0.12% £3.7m
Tim Weller
CFO & Executive Director6.8yrsUK£1.97m0.025% £790.6k
John Connolly
Independent Chairman of the Board7.7yrsUK£385.72k0.022% £676.6k
Steven Mogford
Senior Independent Director3.8yrsUK£80.49k0.00065% £20.2k
Clare Chapman
Non-Executive Director0.4yrsno datano data
Barbara Milian Thoralfsson
Non-Executive Director3.6yrsUK£84.29kno data
Wah Kin
Non-Executive Director9.3yrsUK£81.90k0.0019% £60.3k
Paul Spence
Non-Executive Director7.1yrsUK£94.90k0.0019% £60.3k
John Ramsay
Non-Executive Director2.1yrsUK£89.32k0.0025% £76.5k
Elisabeth Fleuriot
Non-Executive Director1.7yrsUK£49.87kno data

5.3yrs

Average Tenure

61yo

Average Age

Experienced Board: GFS's board of directors are considered experienced (5.3 years average tenure).


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 not been meaningfully diluted in the past year.


Top Shareholders

Company Information

G4S plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: G4S plc
  • Ticker: GFS
  • Exchange: LSE
  • Founded: 1901
  • Industry: Security and Alarm Services
  • Sector: Commercial Services
  • Market Cap: UK£3.108b
  • Shares outstanding: 1.55b
  • Website: https://www.g4s.com

Number of Employees


Location

  • G4S plc
  • Southside
  • 5th Floor
  • London
  • Greater London
  • SW1E 6QT
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
GFSLSE (London Stock Exchange)YesOrdinary SharesGBGBPJul 2004
G4SCPSE (OMX Nordic Exchange Copenhagen)YesOrdinary SharesDKDKKJul 2004
GHNDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 2004
GFSZ.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJul 2004
GFSLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJul 2004
G4SCBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBDKKJul 2004
GFSZ.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDOct 2008

Biography

G4S plc, together with its subsidiaries, provides security and related services in Africa, the Americas, Asia, Europe, and the Middle East. The company offers software tools, including evidence based risk assessment, incident management, and travel advisory systems, such as RISK360; and proprietary security systems comprising symmetry connect access control and visitor management systems. It also provides custody, detention, rehabilitation, and care services; automated cash solutions for retailers, automated bulk-teller solution for banks, and mobile banking services, as well as G4S Pay, a retail cash solution; and security advice, risk mitigation strategies, secure support, and integrated solutions. The company serves corporates and industrials, government, financial institutions, private energy/utilities, and ports and airports, as well as the retail, transport and logistics, and leisure and tourism sectors. G4S plc was founded in 1901 and is based 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 Analysis2020/02/16 20:32
End of Day Share Price2020/02/14 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.