LSE:RCDO

Stock Analysis Report

Executive Summary

Ricardo plc provides engineering, technical, environmental, and strategic consultancy services for transportation original equipment manufacturers and operators, suppliers, energy companies, and government agencies.

Rewards

PE ratio (20.7x) is below the Professional Services industry average (21.3x)

Earnings are forecast to grow 13.02% per year

Pays a high and reliable dividend of 2.77%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Established dividend payer with adequate balance sheet.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-1.0%

RCDO

0.3%

GB Professional Services

-0.2%

GB Market


1 Year Return

25.9%

RCDO

24.5%

GB Professional Services

6.1%

GB Market

Return vs Industry: RCDO exceeded the UK Professional Services industry which returned 24.5% over the past year.

Return vs Market: RCDO exceeded the UK Market which returned 6.1% over the past year.


Shareholder returns

RCDOIndustryMarket
7 Day-1.0%0.3%-0.2%
30 Day-4.0%4.0%-1.8%
90 Day15.0%12.6%4.0%
1 Year30.0%25.9%27.4%24.5%11.8%6.1%
3 Year-6.6%-13.9%57.9%47.3%17.5%2.6%
5 Year21.2%7.5%110.5%85.8%34.8%3.7%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

20.71x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: RCDO (£7.68) is trading above our estimate of fair value (£7.47)

Significantly Below Fair Value: RCDO is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: RCDO is good value based on its PE Ratio (20.7x) compared to the Professional Services industry average (21.3x).

PE vs Market: RCDO is poor value based on its PE Ratio (20.7x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: RCDO is poor value based on its PEG Ratio (1.6x)


Price to Book Ratio

PB vs Industry: RCDO is good value based on its PB Ratio (2.4x) compared to the GB Professional Services industry average (3x).


Next Steps

Future Growth

How is Ricardo forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

13.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RCDO's forecast earnings growth (13% per year) is above the savings rate (0.5%).

Earnings vs Market: RCDO's earnings (13% per year) are forecast to grow faster than the UK market (12.2% per year).

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

Revenue vs Market: RCDO's revenue (3.3% per year) is forecast to grow slower than the UK market (3.4% per year).

High Growth Revenue: RCDO's revenue (3.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RCDO's Return on Equity is forecast to be low in 3 years time (17.1%).


Next Steps

Past Performance

How has Ricardo performed over the past 5 years?

-0.05%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RCDO has high quality earnings.

Growing Profit Margin: RCDO's current net profit margins (5.2%) are higher than last year (4.6%).


Past Earnings Growth Analysis

Earnings Trend: RCDO's earnings have declined by -0.05% per year over the past 5 years.

Accelerating Growth: RCDO's earnings growth over the past year (12.5%) exceeds its 5-year average (-0.05% per year).

Earnings vs Industry: RCDO earnings growth over the past year (12.5%) underperformed the Professional Services industry 16%.


Return on Equity

High ROE: RCDO's Return on Equity (11.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Ricardo's financial position?


Financial Position Analysis

Short Term Liabilities: RCDO's short term assets (£195.4M) exceed its short term liabilities (£95.7M).

Long Term Liabilities: RCDO's short term assets (£195.4M) exceed its long term liabilities (£104.3M).


Debt to Equity History and Analysis

Debt Level: RCDO's debt to equity ratio (48.3%) is considered high.

Reducing Debt: RCDO's debt to equity ratio has increased from 0.09% to 48.3% over the past 5 years.

Debt Coverage: RCDO's debt is well covered by operating cash flow (30.4%).

Interest Coverage: RCDO's interest payments on its debt are well covered by EBIT (14.2x coverage).


Balance Sheet

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

Debt Coverage by Assets: RCDO's debt is covered by short term assets (assets are 2.4x debt).


Next Steps

Dividend

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

2.77%

Current Dividend Yield


Dividend Yield vs Market

company2.8%marketbottom25%1.8%markettop25%5.1%industryaverage2.0%forecastin3Years3.0%

Current dividend yield vs market & industry

Notable Dividend: RCDO's dividend (2.77%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: RCDO's dividend (2.77%) is low compared to the top 25% of dividend payers in the UK market (5.1%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (57.4%), RCDO's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RCDO's dividends in 3 years are forecast to be well covered by earnings (38.5% payout ratio).


Next Steps

Management

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

8.1yrs

Average management tenure


CEO

Dave Shemmans (53yo)

14.3yrs

Tenure

UK£998,000

Compensation

Mr. David Shemmans, also known as Dave, BEng has been a Managing Director of International Operations and Executive Director of Ricardo Plc since February 18, 2005. Mr. Shemmans has been the Chief Executiv ...


CEO Compensation Analysis

Compensation vs Market: Dave's total compensation ($USD1.30M) is above average for companies of similar size in the UK market ($USD850.27K).

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


Leadership Team

NamePositionTenureCompensationOwnership
David Shemmans
CEO, MD of International Operations & Executive Director14.3yrsUK£998.00k0.19% £776.3k
Ian Gibson
CFO & Director6.6yrsUK£573.00k0.090% £367.3k
Mark Garrett
COO & Executive Director11.6yrsUK£482.00k0.11% £458.7k
Marques McCammon
President0.3yrsno datano data
Neville Jackson
Chief Technology & Innovation Officer10.1yrsno datano data
Patricia Ryan
Group General Counsel & Company Secretary15.1yrsno datano data
Timothy Hargreaves
Group Human Resources Director0yrsno datano data
Chris Barnes
Managing Director of Software3.5yrsno data0.000030% £123.0
Mark Jarvis
Group Head of Remuneration & Pensions0yrsno datano data
Thomas Gutwald
Managing Director of Ricardo Innovations5.6yrsno datano data

8.1yrs

Average Tenure

55yo

Average Age

Experienced Management: RCDO's management team is seasoned and experienced (8.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
David Shemmans
CEO, MD of International Operations & Executive Director14.3yrsUK£998.00k0.19% £776.3k
Ian Gibson
CFO & Director6.6yrsUK£573.00k0.090% £367.3k
Mark Garrett
COO & Executive Director11.6yrsUK£482.00k0.11% £458.7k
Jack Boyer
Non-Executive Director0.4yrsno datano data
Malin Persson
Senior Independent Director0.3yrsUK£57.00k0.0028% £11.5k
William Spencer
Independent Non-Executive Director2.8yrsUK£58.00k0.015% £61.4k
Russell King
Non-Executive Director0.4yrsno datano data
Terence Morgan
Non-Executive Chairman5.3yrsUK£153.00k0.028% £115.2k
Laurie Bowen
Independent Non-Executive Director4.6yrsUK£106.00k0.011% £46.1k

4.6yrs

Average Tenure

59yo

Average Age

Experienced Board: RCDO's board of directors are considered experienced (4.6 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.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

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


Key Information

  • Name: Ricardo plc
  • Ticker: RCDO
  • Exchange: LSE
  • Founded: 1915
  • Industry: Research and Consulting Services
  • Sector: Commercial Services
  • Market Cap: UK£409.848m
  • Shares outstanding: 53.37m
  • Website: https://ricardo.com

Number of Employees


Location

  • Ricardo plc
  • Shoreham Technical Centre
  • Shoreham-by-Sea
  • West Sussex
  • BN43 5FG
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RCDOLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
RCDO.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
RIRDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
RCDOlBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992

Biography

Ricardo plc provides engineering, technical, environmental, and strategic consultancy services for transportation original equipment manufacturers and operators, suppliers, energy companies, and government agencies. It operates through Technical Consulting and Performance Products segments. The Technical Consulting segment engages in the provision of engineering program and technical, environmental, and strategic consultancy services for automotive, off-highway and commercial vehicles, rail, energy and environment, defense, and strategy businesses. The Performance Products segment is involved in the provision of development, manufacturing, or assembling services of low-volume and high-performance products, such as bespoke engines, transmissions, and virtual engineering software products for vehicles and motorsport, defense, and software businesses. The company also offers business development and independent assurance services. It operates in the United Kingdom, rest of Europe, the Middle East, Asia, and North America. Ricardo plc was founded in 1915 and is headquartered in Shoreham-by-Sea, 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 20:33
End of Day Share Price2020/02/14 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


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.