SThree Valuation

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

STEM (£3.44) is trading below our estimate of [[fair value]] (£4.22)

Is STEM 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 STEM when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: STEM (£3.44) is trading below our estimate of fair value (£4.22)

Significantly Below Fair Value: STEM 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 STEM?

Key metric: As STEM is profitable we use its Price-To-Earnings Ratio for relative valuation analysis.

The above table shows the Price to Earnings ratio for STEM. This is calculated by dividing STEM's market cap by their current earnings.
What is STEM's PE Ratio?
PE Ratio	8.1x
Earnings	UK£56.48m
Market Cap	UK£457.43m

STEM 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	0.2x
Enterprise Value/EBITDA	5x
PEG Ratio	4.5x

Price to Earnings Ratio vs Peers

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

The above table shows the PE ratio for STEM vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	Forward PE	Estimated Growth	Market Cap
Peer Average	25.6x
IPEL Impellam Group	24.8x	n/a	UK£389.3m
RWA Robert Walters	40x	71.0%	UK£228.0m
PAGE PageGroup	21.9x	28.2%	UK£1.1b
LTG Learning Technologies Group	15.5x	-9.0%	UK£731.8m
STEM SThree	8.1x	1.8%	UK£457.4m

Price-To-Earnings vs Peers: STEM is good value based on its Price-To-Earnings Ratio (8.1x) compared to the peer average (25.6x).

Price to Earnings Ratio vs Industry

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

2 Companies	Price / Earnings	Estimated Growth	Market Cap
IBPO iEnergizer	1.7x	n/a	US$140.06m
TEK Tekcapital	1.5x	n/a	US$20.36m

No more companies available in this PE range

2 Companies		Estimated Growth	Market Cap

No more companies

Price-To-Earnings vs Industry: STEM is good value based on its Price-To-Earnings Ratio (8.1x) compared to the UK Professional Services industry average (23.1x).

Price to Earnings Ratio vs Fair Ratio

What is STEM'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.

STEM PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	8.1x
Fair PE Ratio	16.5x

Price-To-Earnings vs Fair Ratio: STEM is good value based on its Price-To-Earnings Ratio (8.1x) compared to the estimated Fair Price-To-Earnings Ratio (16.5x).

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 STEM 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£3.44	UK£4.94 +43.7%	10.8%	UK£5.50	UK£4.20	n/a	6
Nov ’25	UK£3.62	UK£4.96 +36.9%	10.3%	UK£5.50	UK£4.20	n/a	6
Oct ’25	UK£3.70	UK£4.98 +34.9%	9.6%	UK£5.50	UK£4.20	n/a	6
Sep ’25	UK£4.12	UK£5.03 +22.2%	10.3%	UK£5.55	UK£4.20	n/a	6
Aug ’25	UK£4.03	UK£5.03 +24.9%	10.3%	UK£5.55	UK£4.20	n/a	6
Jul ’25	UK£4.06	UK£5.30 +30.7%	10.1%	UK£6.00	UK£4.30	n/a	6
Jun ’25	UK£4.36	UK£5.58 +27.9%	13.0%	UK£6.90	UK£4.30	n/a	7
May ’25	UK£4.30	UK£5.56 +29.4%	13.5%	UK£6.90	UK£4.20	n/a	7
Apr ’25	UK£4.30	UK£5.56 +29.4%	13.5%	UK£6.90	UK£4.20	n/a	7
Mar ’25	UK£4.19	UK£5.54 +32.1%	15.1%	UK£6.90	UK£3.90	n/a	7
Feb ’25	UK£4.15	UK£5.54 +33.5%	16.3%	UK£6.90	UK£3.90	n/a	6
Jan ’25	UK£4.18	UK£5.60 +34.0%	16.5%	UK£6.90	UK£3.90	n/a	6
Dec ’24	UK£4.10	UK£5.59 +36.4%	18.4%	UK£6.90	UK£3.90	n/a	6
Nov ’24	UK£3.53	UK£5.59 +58.4%	18.4%	UK£6.90	UK£3.90	UK£3.62	6
Oct ’24	UK£3.74	UK£5.77 +54.2%	18.5%	UK£6.90	UK£3.90	UK£3.70	6
Sep ’24	UK£3.54	UK£5.77 +63.1%	18.5%	UK£6.90	UK£3.90	UK£4.12	6
Aug ’24	UK£3.49	UK£5.77 +65.2%	18.5%	UK£6.90	UK£3.90	UK£4.03	6
Jul ’24	UK£3.42	UK£5.77 +68.9%	18.5%	UK£6.90	UK£3.90	UK£4.06	6
Jun ’24	UK£3.79	UK£6.23 +64.5%	16.0%	UK£7.25	UK£4.50	UK£4.36	6
May ’24	UK£4.22	UK£6.23 +47.9%	16.0%	UK£7.25	UK£4.50	UK£4.30	6
Apr ’24	UK£4.17	UK£5.99 +43.9%	18.3%	UK£7.25	UK£4.50	UK£4.30	7
Mar ’24	UK£4.65	UK£5.89 +26.7%	20.7%	UK£7.25	UK£3.90	UK£4.19	7
Feb ’24	UK£4.26	UK£5.89 +38.3%	20.7%	UK£7.25	UK£3.90	UK£4.15	7
Jan ’24	UK£4.03	UK£5.89 +46.2%	20.7%	UK£7.25	UK£3.90	UK£4.18	7
Dec ’23	UK£4.08	UK£5.79 +41.9%	24.1%	UK£7.25	UK£3.20	UK£4.10	7
Nov ’23	UK£3.75	UK£5.79 +54.6%	24.1%	UK£7.25	UK£3.20	UK£3.53	7

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