AIM:HSP

Stock Analysis Report

Hargreaves Services

Executive Summary

Hargreaves Services plc, together with its subsidiaries, engages in the mining, sourcing, processing, blending, moving, and handling coal in the United Kingdom and internationally.

Rewards

Trading at 73.9% below its fair value

Earnings are forecast to grow 59.01% per year

Became profitable this year

Risk Analysis

Dividend of 2.42% is not well covered by earnings

Large one-off items impacting financial results



Snowflake Analysis

Adequate balance sheet with moderate growth potential.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-1.7%

HSP

-0.09%

GB Oil and Gas

-0.4%

GB Market


1 Year Return

-2.0%

HSP

-5.2%

GB Oil and Gas

6.6%

GB Market

Return vs Industry: HSP exceeded the UK Oil and Gas industry which returned -6.1% over the past year.

Return vs Market: HSP underperformed the UK Market which returned 6.2% over the past year.


Shareholder returns

HSPIndustryMarket
7 Day-1.7%-0.09%-0.4%
30 Day-1.3%-7.9%-1.7%
90 Day4.9%-6.3%5.4%
1 Year0.8%-2.0%-0.3%-5.2%12.4%6.6%
3 Year13.4%6.6%24.6%9.0%18.5%3.4%
5 Year-31.5%-40.4%42.4%14.3%35.8%4.7%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Hargreaves Services undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: HSP (£2.98) is trading below our estimate of fair value (£11.4)

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


Price To Earnings Ratio

PE vs Industry: HSP is poor value based on its PE Ratio (101.6x) compared to the Oil and Gas industry average (6.7x).

PE vs Market: HSP is poor value based on its PE Ratio (101.6x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: HSP is poor value based on its PEG Ratio (1.7x)


Price to Book Ratio

PB vs Industry: HSP is overvalued based on its PB Ratio (0.7x) compared to the GB Oil and Gas industry average (0.7x).


Next Steps

Future Growth

How is Hargreaves Services forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

59.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: HSP's forecast earnings growth (59% per year) is above the savings rate (0.5%).

Earnings vs Market: HSP's earnings (59% per year) are forecast to grow faster than the UK market (12.2% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: HSP's revenue is expected to decline over the next 3 years (-9% per year).

High Growth Revenue: HSP's revenue is forecast to decline over the next 3 years (-9% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: HSP's Return on Equity is forecast to be low in 3 years time (6.5%).


Next Steps

Past Performance

How has Hargreaves Services performed over the past 5 years?

-54.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: HSP has a large one-off loss of £3.5M impacting its November 30 2019 financial results.

Growing Profit Margin: HSP became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: HSP's earnings have declined by -54.6% per year over the past 5 years.

Accelerating Growth: HSP has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: HSP has become profitable in the last year, making it difficult to compare its past year earnings growth to the Oil and Gas industry (24.4%).


Return on Equity

High ROE: HSP's Return on Equity (0.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Hargreaves Services's financial position?


Financial Position Analysis

Short Term Liabilities: HSP's short term assets (£188.0M) exceed its short term liabilities (£79.7M).

Long Term Liabilities: HSP's short term assets (£188.0M) exceed its long term liabilities (£58.9M).


Debt to Equity History and Analysis

Debt Level: HSP's debt to equity ratio (38.2%) is considered satisfactory.

Reducing Debt: HSP's debt to equity ratio has increased from 29.7% to 38.2% over the past 5 years.

Debt Coverage: HSP's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: HSP's interest payments on its debt are well covered by EBIT (3.2x coverage).


Balance Sheet

Inventory Level: HSP has a high level of physical assets or inventory.

Debt Coverage by Assets: HSP's debt is covered by short term assets (assets are 3.8x debt).


Next Steps

Dividend

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

2.42%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Hargreaves Services before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company2.4%marketbottom25%1.8%markettop25%5.1%industryaverage5.7%forecastin3Years5.4%

Current dividend yield vs market & industry

Notable Dividend: HSP's dividend (2.42%) is higher than the bottom 25% of dividend payers in the UK market (1.82%).

High Dividend: HSP's dividend (2.42%) is low compared to the top 25% of dividend payers in the UK market (5.15%).


Stability and Growth of Payments

Stable Dividend: HSP's dividend payments have been volatile in the past 10 years.

Growing Dividend: HSP's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (245.4%), HSP's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: HSP's dividends in 3 years are forecast to be covered by earnings (85.2% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.1yrs

Average management tenure


CEO

Gordon Frank Banham (55yo)

18.3yrs

Tenure

UK£641,000

Compensation

Mr. Gordon Frank Colenso Banham serves as Group Chief Executive and Director at Hargreaves Services Plc and joined it on October 01, 2001. Mr. Banham was Managing Director of his family firm, F Banham Limi ...


CEO Compensation Analysis

Compensation vs Market: Gordon Frank's total compensation ($USD829.81K) is above average for companies of similar size in the UK market ($USD325.33K).

Compensation vs Earnings: Gordon Frank's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Gordon Frank Banham
Group Chief Executive & Director18.3yrsUK£641.00k8.16% £7.8m
John William Young Samuel
Group Finance Director2.1yrsUK£323.00kno data
David Anderson
Group Property Director & Director1.3yrsUK£265.25k0.10% £97.7k
Phil Dryden
Chief Operating Officer0yrsno datano data
Julie Haynes
Managing Director of Industrial Services Division0yrsno datano data
John Burks
Managing Director of Production & Distribution Division2.1yrsno datano data
Iain Slater
Managing Director of Property Division0yrsno datano data
Steve Anson
Chief Executive Officer of Blackwell - Specialist Earthworks & Infrastructure Division0yrsno datano data
Hilmar Eller
Managing Director of Europe0yrsno datano data
Frank Oeyen
Managing Director of Hargreaves Carbon Products Nv - Energy & Commodities0yrsno datano data

2.1yrs

Average Tenure

58.5yo

Average Age

Experienced Management: HSP's management team is considered experienced (2.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Gordon Frank Banham
Group Chief Executive & Director18.3yrsUK£641.00k8.16% £7.8m
John William Young Samuel
Group Finance Director2.1yrsUK£323.00kno data
David Anderson
Group Property Director & Director1.3yrsUK£265.25k0.10% £97.7k
Roger McDowell
Non-Executive Chairman1.5yrsUK£76.00k0.93% £894.0k
Nigel Halkes
Senior Independent Non-Executive Director0yrsUK£43.00k0.015% £14.9k

1.8yrs

Average Tenure

63yo

Average Age

Experienced Board: HSP's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

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


Top Shareholders

Company Information

Hargreaves Services Plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Hargreaves Services Plc
  • Ticker: HSP
  • Exchange: AIM
  • Founded: 1994
  • Industry: Coal and Consumable Fuels
  • Sector: Energy
  • Market Cap: UK£96.151m
  • Shares outstanding: 32.27m
  • Website: https://www.hsgplc.co.uk

Number of Employees


Location

  • Hargreaves Services Plc
  • West Terrace
  • Esh Winning
  • Durham
  • County Durham
  • DH7 9PT
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HSPAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPNov 2005
HGRV.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDNov 2005

Biography

Hargreaves Services plc, together with its subsidiaries, engages in the mining, sourcing, processing, blending, moving, and handling coal in the United Kingdom and internationally. It develops and operates surface coal mines; provides earthworks and mining services to various projects; offers underground mining services, such as mining consultancy, contract services, and project management; and provides solid fuels to the industrial and power generation markets. The company also offers specialist engineering contract services in the remediation, geotechnical, and large scale earthmoving areas; develops and realizes land and rents properties; provides bulk haulage and environmental waste disposal services; offers bulk materials handling, facilities management, and mechanical and electrical engineering services; and provides raw materials, such as fuels, ferroalloys, minerals, and pig iron. The company was founded in 1994 and is headquartered in Durham, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 21:10
End of Day Share Price2020/02/20 00:00
Earnings2019/11/30
Annual Earnings2019/05/31


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.