AIM:CTH

Stock Analysis Report

Executive Summary

CareTech Holdings PLC and its subsidiaries provide social care and support services for children, young people, and adults in the United Kingdom.

Rewards

Trading at 73.8% below its fair value

Earnings are forecast to grow 31.67% per year

Earnings grew by 85% over the past year

Pays a high and reliable dividend of 2.51%

Risk Analysis

Debt is not well covered by operating cash flow

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Established dividend payer and good value.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-7.0%

CTH

-5.4%

GB Healthcare

-8.6%

GB Market


1 Year Return

36.2%

CTH

-20.4%

GB Healthcare

-1.3%

GB Market

Return vs Industry: CTH exceeded the UK Healthcare industry which returned -20.4% over the past year.

Return vs Market: CTH exceeded the UK Market which returned -1.3% over the past year.


Shareholder returns

CTHIndustryMarket
7 Day-7.0%-5.4%-8.6%
30 Day1.7%-13.3%-8.4%
90 Day22.9%-28.0%-5.3%
1 Year40.6%36.2%-19.2%-20.4%4.0%-1.3%
3 Year31.8%21.3%-35.2%-38.0%7.6%-6.1%
5 Year134.6%106.2%18.7%12.2%23.4%-4.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is CareTech Holdings 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: CTH (£4.67) is trading below our estimate of fair value (£17.83)

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


Price To Earnings Ratio

PE vs Industry: CTH is poor value based on its PE Ratio (25.4x) compared to the Healthcare industry average (20.8x).

PE vs Market: CTH is poor value based on its PE Ratio (25.4x) compared to the UK market (16.8x).


Price to Earnings Growth Ratio

PEG Ratio: CTH is good value based on its PEG Ratio (0.8x)


Price to Book Ratio

PB vs Industry: CTH is good value based on its PB Ratio (1.5x) compared to the GB Healthcare industry average (1.6x).


Next Steps

Future Growth

How is CareTech Holdings forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

31.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CTH's forecast earnings growth (31.7% per year) is above the savings rate (0.5%).

Earnings vs Market: CTH's earnings (31.7% per year) are forecast to grow faster than the UK market (13.2% per year).

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

Revenue vs Market: CTH's revenue (5.9% per year) is forecast to grow faster than the UK market (3.8% per year).

High Growth Revenue: CTH's revenue (5.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if CTH's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has CareTech Holdings performed over the past 5 years?

5.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CTH has a large one-off loss of £24.8M impacting its September 30 2019 financial results.

Growing Profit Margin: CTH's current net profit margins (5%) are lower than last year (5.7%).


Past Earnings Growth Analysis

Earnings Trend: CTH's earnings have grown by 5.1% per year over the past 5 years.

Accelerating Growth: CTH's earnings growth over the past year (85%) exceeds its 5-year average (5.1% per year).

Earnings vs Industry: CTH earnings growth over the past year (85%) exceeded the Healthcare industry 19.8%.


Return on Equity

High ROE: CTH's Return on Equity (6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is CareTech Holdings's financial position?


Financial Position Analysis

Short Term Liabilities: CTH's short term assets (£83.2M) do not cover its short term liabilities (£103.2M).

Long Term Liabilities: CTH's short term assets (£83.2M) do not cover its long term liabilities (£414.2M).


Debt to Equity History and Analysis

Debt Level: CTH's debt to equity ratio (94.2%) is considered high.

Reducing Debt: CTH's debt to equity ratio has reduced from 151.7% to 94.2% over the past 5 years.

Debt Coverage: CTH's debt is not well covered by operating cash flow (12.5%).

Interest Coverage: CTH's interest payments on its debt are well covered by EBIT (4.4x coverage).


Balance Sheet

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

Debt Coverage by Assets: CTH's debt is not covered by short term assets (assets are 0.3x debt).


Next Steps

Dividend

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

2.51%

Current Dividend Yield


Upcoming Dividend Payment

Purchase CareTech Holdings before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company2.5%marketbottom25%1.9%markettop25%5.4%industryaverage2.1%forecastin3Years2.9%

Current dividend yield vs market & industry

Notable Dividend: CTH's dividend (2.51%) is higher than the bottom 25% of dividend payers in the UK market (1.94%).

High Dividend: CTH's dividend (2.51%) is low compared to the top 25% of dividend payers in the UK market (5.4%).


Stability and Growth of Payments

Stable Dividend: CTH's dividends per share have been stable in the past 10 years.

Growing Dividend: CTH's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (63.7%), CTH's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CTH's dividends in 3 years are forecast to be well covered by earnings (27% payout ratio).


Next Steps

Management

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

3.1yrs

Average management tenure


CEO

Haroon Sheikh (63yo)

27.1yrs

Tenure

UK£920,000

Compensation

Mr. Haroon Sheikh is a Co-Founder and a Director of CareTech Holdings PLC and has been its Chief Executive Officer since 1993. He is a London University graduate, is one of the UK’s leading entrepreneurs,  ...


CEO Compensation Analysis

Compensation vs Market: Haroon's total compensation ($USD1.18M) is about average for companies of similar size in the UK market ($USD1.23M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Farouq Sheikh
Co-Founder & Executive Chairman0yrsUK£785.00k0.57% £3.0m
Haroon Sheikh
Co-Founder27.1yrsUK£920.00k0.62% £3.2m
Michael Adams
Executive Director9.7yrsUK£210.00k0.0019% £10.0k
Christopher Dickinson
CFO & Director0.08yrsno data0.14% £725.0k
John Ivers
Group Chief Operating Officer0yrsno data0.044% £232.4k
Amanda Sherlock
Director of Compliance & Regulatory Management0yrsno datano data
Nasir Quraishi
Group Human Resources Director0yrsno datano data
Julian Spurling
Managing Director of Adults South Division3.1yrsno datano data
Charlotte Smith
Managing Director of Adults North Division3.1yrsno datano data
Lee Jones
Managing Director of Children’s Services0.3yrsno datano data

3.1yrs

Average Tenure

58.5yo

Average Age

Experienced Management: CTH's management team is considered experienced (3.1 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Farouq Sheikh
Co-Founder & Executive Chairman0yrsUK£785.00k0.57% £3.0m
Haroon Sheikh
Co-Founder27.1yrsUK£920.00k0.62% £3.2m
Michael Adams
Executive Director9.7yrsUK£210.00k0.0019% £10.0k
Christopher Dickinson
CFO & Director0.08yrsno data0.14% £725.0k
Karl Monaghan
Senior Independent Non-Executive Director0yrsUK£53.00k0.037% £195.2k
James Cumming
Independent Non-Executive Director6.9yrsUK£42.00k0.0022% £11.7k
Moira Livingston
Independent Non-Executive Director0.7yrsUK£15.00kno data

3.8yrs

Average Tenure

58.5yo

Average Age

Experienced Board: CTH's board of directors are considered experienced (3.8 years average tenure).


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 been diluted in the past year, with total shares outstanding growing by 41.7%.


Top Shareholders

Company Information

CareTech Holdings PLC's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: CareTech Holdings PLC
  • Ticker: CTH
  • Exchange: AIM
  • Founded: 1993
  • Industry: Health Care Facilities
  • Sector: Healthcare
  • Market Cap: UK£523.397m
  • Shares outstanding: 112.08m
  • Website: https://www.caretech-uk.com

Number of Employees


Location

  • CareTech Holdings PLC
  • Metropolitan House
  • 5th Floor
  • Potters Bar
  • Hertfordshire
  • EN6 1AG
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CTHAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPOct 2005
C5PDB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2005

Biography

CareTech Holdings PLC and its subsidiaries provide social care and support services for children, young people, and adults in the United Kingdom. The company operates through two segments, Adult Services and Children Services. The Adult services segment provides individual tailor made solutions for people living in their own homes, residential care, or independent supported living schemes. This segment also provides specialist services to adults through a community based hospital, adult residential care homes, and independent supported living and community outreach. The Children Services segment offers foster care services for physically and intellectually disabled children; and support solutions for children with sensory impairments, as well as foster care family assessments and ongoing support to children who remain with their birth families and in their family homes. It also operates children residential care homes, including facilities for children with learning difficulties and emotional behavioral disorders; and small specialist schools. In addition, this segment offers pre-employment, development, and apprenticeship programs; and training and education services, as well as young people residential services. CareTech Holdings PLC was founded in 1993 and is headquartered in Potters Bar, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/27 21:05
End of Day Share Price2020/02/27 00:00
Earnings2019/09/30
Annual Earnings2019/09/30


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.