Ricardo Valuation

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

RCDO (£4.31) is trading below our estimate of [[fair value]] (£14.15)

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

Valuation Score

5/6

Valuation Score 5/6

Below Fair Value
Significantly Below Fair Value
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Analyst Forecast

Share Price vs Fair Value

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

Below Fair Value: RCDO (£4.31) is trading below our estimate of fair value (£14.15)

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

Key Valuation Metric

Which metric is best to use when looking at relative valuation for RCDO?

Key metric: As RCDO is barely profitable we use its Price-To-Sales Ratio for relative valuation analysis.

The above table shows the Price to Sales ratio for RCDO. This is calculated by dividing RCDO's market cap by their current revenue.
What is RCDO's PS Ratio?
PS Ratio	0.6x
Sales	UK£474.70m
Market Cap	UK£268.14m

RCDO 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	0.7x
Enterprise Value/EBITDA	8.1x
PEG Ratio	7.9x

Price to Sales Ratio vs Peers

How does RCDO's PS Ratio compare to its peers?

The above table shows the PS ratio for RCDO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PS	Estimated Growth	Market Cap
Peer Average	2.3x
DWF DWF Group	0.7x	2.6%	UK£316.4m
FNTL Fintel	4.5x	8.0%	UK£307.4m
SAG Science Group	1.9x	1.6%	UK£209.8m
KEYS Keystone Law Group	2.2x	5.3%	UK£199.0m
RCDO Ricardo	0.6x	4.1%	UK£268.1m

Price-To-Sales vs Peers: RCDO is good value based on its Price-To-Sales Ratio (0.6x) compared to the peer average (2.8x).

Price to Sales Ratio vs Industry

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

10 Companies	Price / Sales	Estimated Growth	Market Cap
HAS Hays	0.2x	1.4%	US$1.56b
IPEL Impellam Group	0.2x	n/a	US$489.91m
CPI Capita	0.1x	1.3%	US$367.82m
RWA Robert Walters	0.2x	0.3%	US$288.23m

10 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Sales vs Industry: RCDO is good value based on its Price-To-Sales Ratio (0.6x) compared to the UK Professional Services industry average (0.7x).

Price to Sales Ratio vs Fair Ratio

What is RCDO's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

RCDO PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio	0.6x
Fair PS Ratio	0.6x

Price-To-Sales vs Fair Ratio: RCDO is good value based on its Price-To-Sales Ratio (0.6x) compared to the estimated Fair Price-To-Sales Ratio (0.6x).

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

The above table shows the analyst RCDO forecast and predictions for the stock price in 12 month’s time.
Date	Share Price	Average 1Y Price Target	Dispersion	High	Low	1Y Actual price	Analysts
Current	UK£4.31	UK£6.50 +50.9%	16.1%	UK£7.75	UK£3.90	n/a	9
Nov ’25	UK£4.32	UK£6.50 +50.6%	16.1%	UK£7.75	UK£3.90	n/a	9
Oct ’25	UK£4.43	UK£6.50 +46.8%	16.1%	UK£7.75	UK£3.90	n/a	9
Sep ’25	UK£4.95	UK£6.54 +32.1%	13.3%	UK£7.75	UK£4.60	n/a	9
Aug ’25	UK£5.20	UK£6.52 +25.3%	14.1%	UK£7.75	UK£4.60	n/a	8
Jul ’25	UK£4.86	UK£6.52 +34.2%	15.1%	UK£7.75	UK£4.60	n/a	7
Jun ’25	UK£4.88	UK£6.05 +23.9%	20.7%	UK£7.75	UK£4.00	n/a	7
May ’25	UK£4.55	UK£6.05 +32.9%	20.7%	UK£7.75	UK£4.00	n/a	7
Apr ’25	UK£4.57	UK£6.08 +33.0%	19.3%	UK£7.75	UK£4.00	n/a	8
Mar ’25	UK£4.22	UK£6.03 +42.8%	19.8%	UK£7.75	UK£4.00	n/a	7
Feb ’25	UK£4.32	UK£6.13 +41.8%	18.0%	UK£7.75	UK£4.00	n/a	7
Jan ’25	UK£4.90	UK£6.13 +25.0%	18.0%	UK£7.75	UK£4.00	n/a	7
Dec ’24	UK£4.71	UK£6.13 +30.1%	18.0%	UK£7.75	UK£4.00	n/a	7
Nov ’24	UK£4.42	UK£6.13 +38.6%	18.0%	UK£7.75	UK£4.00	UK£4.32	7
Oct ’24	UK£4.99	UK£6.18 +23.8%	16.9%	UK£7.75	UK£4.00	UK£4.43	8
Sep ’24	UK£5.24	UK£6.30 +20.3%	17.0%	UK£7.75	UK£4.00	UK£4.95	7
Aug ’24	UK£5.74	UK£6.34 +10.4%	17.0%	UK£7.75	UK£4.00	UK£5.20	7
Jul ’24	UK£5.72	UK£6.13 +7.2%	14.7%	UK£6.75	UK£4.00	UK£4.86	7
Jun ’24	UK£5.64	UK£6.13 +8.7%	14.7%	UK£6.75	UK£4.00	UK£4.88	7
May ’24	UK£6.00	UK£6.13 +2.2%	14.7%	UK£6.75	UK£4.00	UK£4.55	7
Apr ’24	UK£5.54	UK£6.04 +9.0%	14.5%	UK£6.75	UK£4.00	UK£4.57	8
Mar ’24	UK£5.65	UK£5.59 -1.1%	13.2%	UK£6.60	UK£4.00	UK£4.22	8
Feb ’24	UK£5.20	UK£5.59 +7.5%	13.2%	UK£6.60	UK£4.00	UK£4.32	8
Jan ’24	UK£4.81	UK£5.34 +11.1%	15.0%	UK£6.60	UK£4.00	UK£4.90	8
Dec ’23	UK£4.64	UK£5.34 +15.1%	15.0%	UK£6.60	UK£4.00	UK£4.71	8
Nov ’23	UK£4.40	UK£5.34 +21.4%	15.0%	UK£6.60	UK£4.00	UK£4.42	8

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.