LSE:CTEC

Stock Analysis Report

Executive Summary

ConvaTec Group Plc develops, manufactures, and markets medical products and technologies worldwide.


Snowflake Analysis

Reasonable growth potential with adequate balance sheet.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-0.2%

CTEC

-3.0%

GB Medical Equipment

-5.4%

GB Market


1 Year Return

32.6%

CTEC

-3.9%

GB Medical Equipment

-25.2%

GB Market

Return vs Industry: CTEC exceeded the UK Medical Equipment industry which returned -1.5% over the past year.

Return vs Market: CTEC exceeded the UK Market which returned -25% over the past year.


Shareholder returns

CTECIndustryMarket
7 Day-0.2%-3.0%-5.4%
30 Day-3.3%-19.8%-20.6%
90 Day-10.2%-22.9%-29.1%
1 Year36.0%32.6%-2.1%-3.9%-21.5%-25.2%
3 Year-30.6%-35.5%1.3%-4.6%-15.3%-25.9%
5 Yearn/a27.5%15.3%-3.6%-25.1%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Convatec Group undervalued compared to its fair value and its price relative to the market?

30.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CTEC (£1.81) is trading below our estimate of fair value (£2.58)

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


Price To Earnings Ratio

PE vs Industry: CTEC is poor value based on its PE Ratio (451x) compared to the Medical Equipment industry average (25.2x).

PE vs Market: CTEC is poor value based on its PE Ratio (451x) compared to the UK market (12.5x).


Price to Earnings Growth Ratio

PEG Ratio: CTEC is poor value based on its PEG Ratio (10.2x)


Price to Book Ratio

PB vs Industry: CTEC is good value based on its PB Ratio (2.8x) compared to the GB Medical Equipment industry average (2.9x).


Next Steps

Future Growth

How is Convatec Group forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

44.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CTEC's forecast earnings growth (44.4% per year) is above the savings rate (0.5%).

Earnings vs Market: CTEC's earnings (44.4% per year) are forecast to grow faster than the UK market (15.6% per year).

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

Revenue vs Market: CTEC's revenue (3.2% per year) is forecast to grow faster than the UK market (2.4% per year).

High Growth Revenue: CTEC's revenue (3.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CTEC's Return on Equity is forecast to be low in 3 years time (14.9%).


Next Steps

Past Performance

How has Convatec Group performed over the past 5 years?

62.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CTEC has a large one-off loss of $128.7M impacting its December 31 2019 financial results.

Growing Profit Margin: CTEC's current net profit margins (0.5%) are lower than last year (12.1%).


Past Earnings Growth Analysis

Earnings Trend: CTEC has become profitable over the past 5 years, growing earnings by 62.9% per year.

Accelerating Growth: CTEC's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CTEC had negative earnings growth (-95.6%) over the past year, making it difficult to compare to the Medical Equipment industry average (-9.5%).


Return on Equity

High ROE: CTEC's Return on Equity (0.6%) is considered low.


Next Steps

Financial Health

How is Convatec Group's financial position?


Financial Position Analysis

Short Term Liabilities: CTEC's short term assets ($968.3M) exceed its short term liabilities ($397.3M).

Long Term Liabilities: CTEC's short term assets ($968.3M) do not cover its long term liabilities ($1.7B).


Debt to Equity History and Analysis

Debt Level: CTEC's debt to equity ratio (95.2%) is considered high.

Reducing Debt: CTEC had negative shareholder equity 5 years ago, but is now positive and has therefore improved.


Balance Sheet

Inventory Level: CTEC has a low level of unsold assets or inventory.

Debt Coverage by Assets: CTEC's debt is not covered by short term assets (assets are 0.7x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: CTEC is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: CTEC is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

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

2.54%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: CTEC's dividend (2.54%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (2.67%).

High Dividend: CTEC's dividend (2.54%) is low compared to the top 25% of dividend payers in the UK market (7.36%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, CTEC has been paying a dividend for less than 10 years.

Growing Dividend: CTEC's dividend payments have increased, but the company has only paid a dividend for 3 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (1146.4%), CTEC's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CTEC's dividends in 3 years are forecast to be well covered by earnings (45.1% payout ratio).


Next Steps

Management

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

1.4yrs

Average management tenure


CEO

Karim Bitar (54yo)

0.58

Tenure

US$6,878,000

Compensation

Mr. Karim Bitar serves as Chief Executive Officer and Director at Convatec Group Plc since September 30, 2019. Mr. Bitar served as the Chief Executive Officer of Genus plc from September 30, 2011 to Septem ...


CEO Compensation Analysis

Compensation vs Market: Karim's total compensation ($USD8.53M) is above average for companies of similar size in the UK market ($USD2.48M).

Compensation vs Earnings: Insufficient data to compare Karim's compensation with company performance.


Leadership Team

NamePositionTenureCompensationOwnership
Karim Bitar
CEO & Director0.58yrUS$6.88m0.050% $1.8m
Frank Schulkes
CFO & Director2.42yrsUS$979.00k0.0083% $298.2k
Donal Balfe
Executive Vice President of Global Quality0.17yrno datano data
Divakar Ramakrishnan
Chief Technology Officer0.25yrno datano data
Mark Reynolds
Director of Investor Relationsno datano datano data
Adam Deutsch
Chief Transformation Officer & General Counsel5.67yrsno datano data
Sean McGrath
Executive Vice President of Human Resources2.25yrsno datano data
John Lindskog
President & COO of Global Infusion Care0.17yrno datano data
Christian Hoengaard
Senior VP & GM - USAno datano datano data
Kjersti Grimsrud
President & COO of Global Continence Care2.25yrsno datano data

1.4yrs

Average Tenure

57.5yo

Average Age

Experienced Management: CTEC's management team is not considered experienced ( 1.4 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Karim Bitar
CEO & Director0.58yrUS$6.88m0.050% $1.8m
Frank Schulkes
CFO & Director2.42yrsUS$979.00k0.0083% $298.2k
John David McAdam
Independent Chairman0.58yrUS$81.00k0.0012% $41.8k
Regina Benjamin
Independent Non-Executive Director2.67yrsUS$94.00k0.00051% $18.2k
Margaret Ewing
Senior Independent Director1.08yrsUS$123.00k0.00051% $18.2k
Sten Scheibye
Non-Executive Director1.75yrsUS$60.00k0.0013% $45.1k
Brian May
Non-Executive Director0.083yrno data0.0013% $45.1k
Rick Anderson
Non-Executive Director3.5yrsUS$1.14m0.010% $374.7k
Rosalind Rivaz
Independent Non-Executive Director2.83yrsUS$109.00k0.00049% $17.5k

1.8yrs

Average Tenure

62yo

Average Age

Experienced Board: CTEC'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: CTEC insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

Convatec Group Plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Convatec Group Plc
  • Ticker: CTEC
  • Exchange: LSE
  • Founded: 2008
  • Industry: Health Care Supplies
  • Sector: Healthcare
  • Market Cap: UK£3.575b
  • Shares outstanding: 1.98b
  • Website: https://www.convatecgroup.com

Number of Employees


Location

  • Convatec Group Plc
  • 3 Forbury Place
  • 23 Forbury Road
  • Reading
  • Berkshire
  • RG1 3JH
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CTECLSE (London Stock Exchange)YesCommon StockGBGBPOct 2016
CTECLBATS-CHIXE (BATS 'Chi-X Europe')YesCommon StockGBGBPOct 2016
CNVV.FOTCPK (Pink Sheets LLC)YesCommon StockUSUSDOct 2016
2CVDB (Deutsche Boerse AG)YesCommon StockDEEUROct 2016
CNVV.YOTCPK (Pink Sheets LLC)UNSP ADR EACH REP 4 ORD SHSUSUSDJan 2017
2CVUDB (Deutsche Boerse AG)UNSP ADR EACH REP 4 ORD SHSDEEURJan 2017

Biography

ConvaTec Group Plc develops, manufactures, and markets medical products and technologies worldwide. It offers advanced wound dressings and skin care products for the management of chronic wounds resulting from various conditions, such as diabetes, immobility, and venous disease, as well as for traumatic injury, burns, invasive surgery, and other causes. The company also provides devices, accessories, and services for people with an ostomy or stoma resulting from colorectal cancer, inflammatory bowel disease, bladder cancer, obesity, and other causes. In addition, it offers continence and critical care products, including intermittent urinary catheters; and products for people with urinary continence issues related to spinal cord injuries, multiple sclerosis, spina bifida, and urological disorders, as well as devices and products use in intensive care units and hospital settings. Further, the company provides advanced systems for managing acute fecal incontinence, as well as for monitoring urine production output and intra-abdominal pressure; and various disposable medical devices, such as wound drainage systems, urine collection bags and catheters, airway management and oxygen/aerosol therapy devices, suction handles and tubes, gastroenterology tubes, and securement devices. Additionally, it offers disposable infusion sets to the manufacturers of insulin pumps for diabetes, as well as similar pumps that are used in continuous infusion treatments for other conditions; and various products to hospitals and the home healthcare sector. The company sells its products to pharmacies, hospitals, and other acute and post-acute healthcare service providers directly or through distributors and wholesalers. It serves a range of customers, including healthcare providers, patients, and manufacturers. The company was founded in 2008 and is headquartered in Reading, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/03 01:46
End of Day Share Price2020/04/02 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.