Serco Group Valuation

Is SRP 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-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Analyst Forecast

Share Price vs Fair Value

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

Below Fair Value: SRP (£1.84) is trading below our estimate of fair value (£1.97)

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


Key Valuation Metric

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

Other financial metrics that can be useful for relative valuation.

SRP 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/Revenue0.5x
Enterprise Value/EBITDA11.2x
PEG Ratio-1.9x

Price to Earnings Ratio vs Peers

How does SRP's PE Ratio compare to its peers?

The above table shows the PE ratio for SRP vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyForward PEEstimated GrowthMarket Cap
Peer Average18.6x
MTO Mitie Group
14.2x15.4%UK£1.4b
RWI Renewi
12.5x20.5%UK£472.0m
RTO Rentokil Initial
29.9x17.2%UK£11.4b
WATR Water Intelligence
17.9x17.8%UK£57.9m
SRP Serco Group
9.9x-5.1%UK£2.0b

Price-To-Earnings vs Peers: SRP is good value based on its Price-To-Earnings Ratio (9.9x) compared to the peer average (18.6x).


Price to Earnings Ratio vs Industry

How does SRP's PE Ratio compare vs other companies in the GB Commercial Services Industry?

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a15.4%
n/an/an/a
No. of CompaniesPE048121620

Fetching data

0 CompaniesPrice / EarningsEstimated GrowthMarket Cap
Industry Avg.n/a15.4%
n/an/an/a
No more companies

Price-To-Earnings vs Industry: SRP is good value based on its Price-To-Earnings Ratio (9.9x) compared to the European Commercial Services industry average (14.4x).


Price to Earnings Ratio vs Fair Ratio

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

SRP PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio9.9x
Fair PE Ratio16.3x

Price-To-Earnings vs Fair Ratio: SRP is good value based on its Price-To-Earnings Ratio (9.9x) compared to the estimated Fair Price-To-Earnings Ratio (16.3x).


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 SRP forecast and predictions for the stock price in 12 month’s time.
DateShare PriceAverage 1Y Price TargetDispersionHighLow1Y Actual priceAnalysts
CurrentUK£1.84
UK£2.25
+22.3%
9.6%UK£2.66UK£2.00n/a10
Apr ’25UK£1.90
UK£2.25
+18.8%
9.6%UK£2.66UK£2.00n/a10
Mar ’25UK£1.89
UK£2.29
+21.0%
15.3%UK£3.24UK£2.00n/a11
Feb ’25UK£1.77
UK£2.23
+25.8%
17.4%UK£3.24UK£1.85n/a11
Jan ’25UK£1.62
UK£2.23
+37.3%
17.4%UK£3.24UK£1.85n/a11
Dec ’24UK£1.58
UK£2.21
+39.6%
17.8%UK£3.24UK£1.85n/a11
Nov ’24UK£1.43
UK£2.21
+54.4%
17.8%UK£3.24UK£1.85n/a11
Oct ’24UK£1.49
UK£2.21
+48.2%
17.8%UK£3.24UK£1.85n/a11
Sep ’24UK£1.52
UK£2.21
+45.0%
17.8%UK£3.24UK£1.85n/a11
Aug ’24UK£1.57
UK£2.08
+32.6%
10.2%UK£2.54UK£1.85n/a11
Jul ’24UK£1.56
UK£2.03
+30.4%
8.0%UK£2.30UK£1.75n/a11
Jun ’24UK£1.45
UK£2.00
+38.4%
7.2%UK£2.30UK£1.75n/a11
May ’24UK£1.52
UK£2.00
+31.8%
7.2%UK£2.30UK£1.75n/a11
Apr ’24UK£1.53
UK£2.00
+30.7%
7.2%UK£2.30UK£1.75UK£1.9011
Mar ’24UK£1.64
UK£2.02
+23.3%
7.7%UK£2.30UK£1.75UK£1.8911
Feb ’24UK£1.46
UK£2.02
+37.8%
7.5%UK£2.24UK£1.75UK£1.7710
Jan ’24UK£1.55
UK£2.03
+30.4%
6.8%UK£2.24UK£1.85UK£1.6210
Dec ’23UK£1.72
UK£2.07
+20.2%
9.7%UK£2.58UK£1.85UK£1.5810
Nov ’23UK£1.63
UK£2.07
+26.7%
9.6%UK£2.58UK£1.85UK£1.4310
Oct ’23UK£1.56
UK£2.09
+33.4%
9.1%UK£2.58UK£1.85UK£1.4910
Sep ’23UK£1.71
UK£2.03
+19.1%
11.4%UK£2.55UK£1.55UK£1.5211
Aug ’23UK£1.88
UK£1.99
+5.8%
10.6%UK£2.44UK£1.55UK£1.5711
Jul ’23UK£1.73
UK£1.92
+11.2%
9.2%UK£2.15UK£1.55UK£1.5611
Jun ’23UK£1.79
UK£1.86
+4.2%
10.1%UK£2.15UK£1.55UK£1.4511
May ’23UK£1.52
UK£1.73
+13.7%
7.0%UK£1.90UK£1.55UK£1.5211
Apr ’23UK£1.46
UK£1.73
+18.8%
7.0%UK£1.90UK£1.55UK£1.5311

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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