LSE:AA.

Stock Analysis Report

Executive Summary

AA plc provides roadside assistance, insurance, and driving services in the United Kingdom.

Snowflake

Fundamentals

Undervalued second-rate dividend payer.

Risks

  • AA has significant price volatility in the past 3 months.

Similar Companies

Share Price & News

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


Latest Share Price and Events


Market Performance


7 Day Return

-0.2%

LSE:AA.

-3.6%

GB Consumer Services

-1.7%

GB Market


1 Year Return

-53.3%

LSE:AA.

5.3%

GB Consumer Services

-5.7%

GB Market

AA. underperformed the Consumer Services industry which returned 5.3% over the past year.

AA. underperformed the Market in United Kingdom of Great Britain and Northern Ireland which returned -5.7% over the past year.


Share holder returns

AA.IndustryMarket
7 Day-0.2%-3.6%-1.7%
30 Day4.9%1.5%-4.8%
90 Day-18.9%4.2%-2.7%
1 Year-52.1%-53.3%6.4%5.3%-1.3%-5.7%
3 Year-78.8%-80.7%-3.1%-5.5%17.8%4.0%
5 Year-78.1%-80.8%-22.0%-38.2%26.9%0.2%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is AA undervalued based on future cash flows and its price relative to the stock market?

>50%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

AA's share price is below the future cash flow value, and at a moderate discount (> 20%).

AA's share price is below the future cash flow value, and at a substantial discount (> 40%).


Price Based on Earnings

AA is good value based on earnings compared to the Europe Consumer Services industry average.

AA is good value based on earnings compared to the United Kingdom of Great Britain and Northern Ireland market.


Price Based on Expected Growth

AA is good value based on expected growth next year.


Price Based on Value of Assets

AA has negative assets, we can't compare the value of its assets to the GB Consumer Services industry average.


Next Steps

Future Growth

How is AA expected to perform in the next 1 to 3 years based on estimates from 5 analysts?

17.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

AA's revenue is expected to grow by 1.1% yearly, however this is not considered high growth (20% yearly).

AA's earnings are expected to grow by 17.7% yearly, however this is not considered high growth (20% yearly).

AA's revenue growth is positive but not above the United Kingdom of Great Britain and Northern Ireland market average.

AA's earnings growth is expected to exceed the United Kingdom of Great Britain and Northern Ireland market average.

AA's earnings growth is expected to exceed the low risk savings rate of 1.2%.


Earnings per Share Growth Estimates


Future Return on Equity

Unable to establish if AA will efficiently use shareholders’ funds in the future without estimates of Return on Equity.


Next Steps

Past Performance

How has AA performed over the past 5 years?

-1.0%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

AA's year on year earnings growth rate was negative over the past 5 years and the most recent earnings are below average.

AA's 1-year earnings growth is negative, it can't be compared to the 5-year average.

AA's 1-year earnings growth is negative, it can't be compared to the Europe Consumer Services industry average.


Return on Equity

It is difficult to establish if AA has efficiently used shareholders’ funds last year (Return on Equity greater than 20%) due to its liabilities exceeding its assets.


Return on Assets

AA used its assets more efficiently than the Europe Consumer Services industry average last year based on Return on Assets.


Return on Capital Employed

AA's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is AA's financial position?


Financial Position Analysis

AA's short term (1 year) commitments are greater than its holdings of cash and other short term assets.

AA's long term commitments exceed its cash and other short term assets.


Debt to Equity History and Analysis

AA has negative shareholder equity (liabilities exceed assets), this is a more serious situation compared with a high debt level.

Irrelevant to check if AA's debt level has increased considering it has negative shareholder equity.

Debt is not well covered by operating cash flow (9.5%, less than 20% of total debt).

Interest payments on debt are not well covered by earnings (EBIT is 1.5x annual interest expense, ideally 3x coverage).


Balance Sheet

Low level of unsold assets.

AA has negative shareholder equity (liabilities exceed assets) therefore debt is not covered by short term assets.


Next Steps

Dividend

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

4.05%

Expected Dividend Yield


Dividend Yield and Payments Analysis

AA's pays a higher dividend yield than the bottom 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (2.08%).

AA's dividend is below the markets top 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (5.77%).

AA has been paying a dividend for less than 10 years and during this time payments have been volatile (annual drop of over 20%).

AA has only been paying a dividend for 4 years, and since then dividends per share have fallen.


Current Payout to Shareholders

Dividends paid are well covered by earnings (3.4x coverage).


Future Payout to Shareholders

Dividends after 3 years are expected to be thoroughly covered by earnings (9x coverage).


Next Steps

Management

What is the CEO of AA's salary, the management and board of directors tenure and is there insider trading?

1.8yrs

Average management tenure


CEO

Simon Breakwell (54yo)

2.0yrs

Tenure

UK£1,486,000

Compensation

Mr. Simon J. Breakwell serves as the Chief Operating Officer of Trove, Inc. Mr. Breakwell has been the Chief Executive Officer of AA plc since September 26, 2017 and served as its Acting Chief Executive s ...


CEO Compensation Analysis

Simon's remuneration is higher than average for companies of similar size in United Kingdom of Great Britain and Northern Ireland.

Simon's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

1.8yrs

Average Tenure

54yo

Average Age

The average tenure for the AA management team is less than 2 years, this suggests a new team.


Board Age and Tenure

2.0yrs

Average Tenure

57.5yo

Average Age

The average tenure for the AA board of directors is less than 3 years, this suggests a new board.


Insider Trading

More shares have been bought than sold by AA individual insiders in the past 3 months.


Recent Insider Transactions

BuyUK£49,72629 May 19
Simon Breakwell
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Director
Shares83,873
Max PriceUK£0.60
BuyUK£33,97029 May 19
John Leach
EntityIndividual
Role
Chairman of the Board
Chairman
Shares57,188
Max PriceUK£0.59
BuyUK£60,21029 May 19
Stephen Barber
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares100,000
Max PriceUK£0.60
BuyUK£71,32009 May 19
Simon Breakwell
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Director
Shares96,444
Max PriceUK£0.74
BuyUK£49,73905 Dec 18
Andrew Blowers
EntityIndividual
Role
Lead Director
Senior Independent Director
Shares54,785
Max PriceUK£0.91
BuyUK£15,02103 Oct 18
Suzi Williams
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares15,021
Max PriceUK£1.00
BuyUK£99,46801 Oct 18
Simon Breakwell
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Director
Shares102,018
Max PriceUK£0.97

Ownership Breakdown


Management Team

  • Simon Breakwell (54yo)

    CEO & Executive Director

    • Tenure: 2.0yrs
    • Compensation: UK£1.49m
  • Janet Connor (54yo)

    Managing Director of Insurance

    • Tenure: 0.0yrs
  • Gareth Kirkwood (55yo)

    Managing Director of Roadside Services

    • Tenure: 1.8yrs
  • Linda Kennedy-Mccarthy

    Chief People Officer

    • Tenure: 0.6yrs
  • Mark Strickland

    Interim Chief Financial Officer

    • Tenure: 0.3yrs
  • Rob Scott (45yo)

    Financial Controller

    • Tenure: 7.6yrs
  • Edmund King (61yo)

    President

    • Tenure: 11.6yrs
  • Ollie Holden

    Chief Information Officer

    • Tenure: 1.8yrs
  • Nadia Hoosen

    Chief Legal Officer & Company Secretary

    • Tenure: 1.1yrs
  • Zeeshan Maqbool

    Head of Investor Relations & Corporate Finance

    • Tenure: 0.0yrs

Board Members

  • Simon Breakwell (54yo)

    CEO & Executive Director

    • Tenure: 2.0yrs
    • Compensation: UK£1.49m
  • Cathryn Riley (57yo)

    Non-Executive Director

    • Tenure: 1.5yrs
    • Compensation: UK£126.00k
  • Suzi Williams (51yo)

    Non-Executive Director

    • Tenure: 3.8yrs
    • Compensation: UK£95.00k
  • Steve Barber (67yo)

    Non-Executive Director

    • Tenure: 1.2yrs
    • Compensation: UK£61.00k
  • Andrew Blowers (58yo)

    Senior Independent Director

    • Tenure: 2.0yrs
    • Compensation: UK£137.00k
  • John Leach (70yo)

    Chairman

    • Tenure: 2.0yrs
    • Compensation: UK£275.00k
  • Mark Brooker

    Non-Executive Director

    • Tenure: 1.1yrs
    • Compensation: UK£45.00k

Company Information

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


Key Information

  • Name: AA plc
  • Ticker: AA.
  • Exchange: LSE
  • Founded: 1905
  • Industry: Specialized Consumer Services
  • Sector: Consumer Services
  • Market Cap: UK£322.789m
  • Shares outstanding: 614.84m
  • Website: https://www.theaa.com

Number of Employees


Location

  • AA plc
  • Fanum House
  • Basing View
  • Basingstoke
  • Hampshire
  • RG21 4EA
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AA.LSE (London Stock Exchange)YesOrdinary SharesGBGBPJun 2014
2XADB (Deutsche Boerse AG)YesOrdinary SharesDEEURJun 2014
AALBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJun 2014
AATD.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJun 2014

Biography

AA plc provides roadside assistance, insurance, and driving services in the United Kingdom. It operates through two segments, Roadside and Insurance. The company offers breakdowns cover for cars, motorcycl ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/08/18 22:19
End of Day Share Price2019/08/16 00:00
Earnings2019/01/31
Annual Earnings2019/01/31


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.