LSE:SRP

Stock Analysis Report

Executive Summary

Serco Group plc provides public services in the United Kingdom, Europe, North America, the Asia Pacific, and the Middle East.

Snowflake

Fundamentals

High growth potential with excellent balance sheet.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

1.2%

SRP

0.8%

GB Commercial Services

-0.4%

GB Market


1 Year Return

75.4%

SRP

17.6%

GB Commercial Services

4.5%

GB Market

Return vs Industry: SRP exceeded the UK Commercial Services industry which returned 17.6% over the past year.

Return vs Market: SRP exceeded the UK Market which returned 4.5% over the past year.


Shareholder returns

SRPIndustryMarket
7 Day1.2%0.8%-0.4%
30 Day1.5%1.4%1.7%
90 Day11.6%5.6%4.7%
1 Year75.4%75.4%21.2%17.6%10.0%4.5%
3 Year15.9%15.9%24.5%13.7%22.5%6.9%
5 Year15.0%-6.9%31.9%10.6%33.0%2.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

34.23x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SRP (£1.58) is trading above our estimate of fair value (£1.23)

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


Price To Earnings Ratio

PE vs Industry: SRP is poor value based on its PE Ratio (34.2x) compared to the Commercial Services industry average (18.7x).

PE vs Market: SRP is poor value based on its PE Ratio (34.2x) compared to the UK market (17.2x).


Price to Earnings Growth Ratio

PEG Ratio: SRP is poor value based on its PEG Ratio (1.2x)


Price to Book Ratio

PB vs Industry: SRP is overvalued based on its PB Ratio (3.3x) compared to the GB Commercial Services industry average (1.8x).


Next Steps

Future Growth

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

29.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SRP's forecast earnings growth (29.5% per year) is above the savings rate (1.2%).

Earnings vs Market: SRP's earnings (29.5% 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: SRP's revenue (7.3% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: SRP's revenue (7.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SRP's Return on Equity is forecast to be high in 3 years time (20.7%)


Next Steps

Past Performance

How has Serco Group performed over the past 5 years?

76.3%

Historical annual earnings growth


Earnings and Revenue History

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

Growing Profit Margin: SRP's current net profit margins (1.7%) are higher than last year (0.9%).


Past Earnings Growth Analysis

Earnings Trend: SRP's earnings have grown significantly by 76.3% per year over the past 5 years.

Accelerating Growth: SRP's earnings growth over the past year (100.8%) exceeds its 5-year average (76.3% per year).

Earnings vs Industry: SRP earnings growth over the past year (100.8%) exceeded the Commercial Services industry 14.9%.


Return on Equity

High ROE: SRP's Return on Equity (9.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Serco Group's financial position?


Financial Position Analysis

Short Term Liabilities: SRP's short term assets (£799.4M) exceeds its short term liabilities (£749.3M)

Long Term Liabilities: SRP's short term assets (799.4M) exceeds its long term liabilities (536.6M)


Debt to Equity History and Analysis

Debt Level: SRP's debt to equity ratio (45.2%) is considered high

Reducing Debt: SRP's debt to equity ratio has reduced from 61.3% to 45.2% over the past 5 years.

Debt Coverage: SRP's debt is well covered by operating cash flow (26.1%).

Interest Coverage: SRP's interest payments on its debt are well covered by EBIT (6.3x coverage).


Balance Sheet

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

Debt Coverage by Assets: SRP's debt is covered by short term assets (assets are 3.3x debt).


Next Steps

Dividend

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

1.17%

Forecast Dividend Yield


Dividend Yield vs Market

company0%marketbottom25%2.0%markettop25%5.3%industryaverage2.8%forecastin3Years1.2%

Current dividend yield vs market & industry

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

High Dividend: Unable to evaluate SRP'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 SRP's dividends per share have been stable in the past.

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


Current Payout to Shareholders

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


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SRP'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 Serco Group's salary, the management and board of directors tenure and is there insider trading?

3.5yrs

Average management tenure


CEO

Rupert Soames (60yo)

5.5yrs

Tenure

UK£4,478,101

Compensation

Mr. Rupert C. Soames, OBE, has been the Group Chief Executive of Serco Group Plc since June 01, 2014. Mr. Soames served as the Group Chief Executive at Aggreko plc from July 1, 2003 to April 24, 2014. He h ...


CEO Compensation Analysis

Compensation vs Market: Rupert's total compensation ($USD5.78M) is above average for companies of similar size in the UK market ($USD2.20M).

Compensation vs Earnings: Rupert's compensation has increased by more than 20% in the past year.


Management Age and Tenure

3.5yrs

Average Tenure

Experienced Management: SRP's management team is considered experienced (3.5 years average tenure).


Board Age and Tenure

2.4yrs

Average Tenure

60.5yo

Average Age

Experienced Board: SRP's board of directors are not considered experienced ( 2.4 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£69,80008 Aug 19
Roy Gardner
EntityIndividual
Role
Chairman of the Board
Independent Chairman of the Board
Shares50,000
Max PriceUK£1.40
BuyUK£64,65027 Feb 19
Roy Gardner
EntityIndividual
Role
Chairman of the Board
Independent Chairman of the Board
Shares50,000
Max PriceUK£1.29

Ownership Breakdown

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


Management Team

  • Angus Cockburn (56yo)

    Group CFO & Director

    • Tenure: 5.1yrs
    • Compensation: UK£2.41m
  • Rupert Soames (60yo)

    Group CEO & Director

    • Tenure: 5.5yrs
    • Compensation: UK£4.48m
  • Marcus De Ville

    Head of Media Relations

    • Tenure: 0yrs
  • Stuart Ford

    Head of Investor Relations

    • Tenure: 0yrs
  • Paul McCarter

    Managing Director - UK Defense Business

    • Tenure: 3.4yrs
  • David Eveleigh

    Group General Counsel & Company Secretary

    • Tenure: 4yrs
  • Phil Malem

    Chief Executive Officer of Serco Middle East

    • Tenure: 0.6yrs
  • Ian Crichton

    Managing Director of Health Business

    • Tenure: 3.7yrs
  • Anthony Kirby

    Group Human Resources Director

    • Tenure: 2.1yrs
  • Lianne Dance

    Group Head of Reward

    • Tenure: 0.9yrs

Board Members

  • John Rishton (61yo)

    Senior Independent Non-Executive Director

    • Tenure: 0.8yrs
    • Compensation: UK£78.02k
  • Angus Cockburn (56yo)

    Group CFO & Director

    • Tenure: 5.1yrs
    • Compensation: UK£2.41m
  • Roy Gardner (74yo)

    Independent Chairman of the Board

    • Tenure: 4.3yrs
    • Compensation: UK£269.00k
  • Ian El-Mokadem (51yo)

    Independent Non-Executive Director

    • Tenure: 2.3yrs
    • Compensation: UK£61.75k
  • Rupert Soames (60yo)

    Group CEO & Director

    • Tenure: 5.5yrs
    • Compensation: UK£4.48m
  • Dave Dacquino

    Chairman & CEO of Serco Americas

    • Tenure: 2.4yrs
  • Lynne Peacock (66yo)

    Independent Non-Executive Director

    • Tenure: 2.3yrs
    • Compensation: UK£65.00k
  • Eric Born

    Independent Non-Executive Director

    • Tenure: 0.8yrs
  • Janis Lomax (73yo)

    Independent Non-Executive Director

    • Tenure: 5.7yrs
    • Compensation: UK£70.00k
  • A. Bashforth (49yo)

    Independent Non-Executive Director

    • Tenure: 2.2yrs
    • Compensation: UK£59.89k

Company Information

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


Key Information

  • Name: Serco Group plc
  • Ticker: SRP
  • Exchange: LSE
  • Founded: 1929
  • Industry: Environmental and Facilities Services
  • Sector: Commercial Services
  • Market Cap: UK£1.932b
  • Shares outstanding: 1.22b
  • Website: https://www.serco.com

Number of Employees


Location

  • Serco Group plc
  • Serco House
  • 16 Bartley Wood Business Park
  • Hook
  • Hampshire
  • RG27 9UY
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SECC.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
SRPLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
SEODB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
SRPLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
SCGP.YOTCPK (Pink Sheets LLC)SPONSORED ADRUSUSDJan 2009

Biography

Serco Group plc provides public services in the United Kingdom, Europe, North America, the Asia Pacific, and the Middle East. The company offers base and operational support engineering, and management and ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/11/16 20:34
End of Day Share Price2019/11/15 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.