LSE:GRI

Stock Analysis Report

Executive Summary

Grainger plc, together with its subsidiaries, owns, develops, manages, and rents residential properties in the United Kingdom.

Rewards

PE ratio (16.7x) is below the UK market (18.5x)

Earnings are forecast to grow 9.18% per year

Earnings grew by 31.5% over the past year

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

Proven track record with mediocre balance sheet.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

6.8%

GRI

2.6%

GB Real Estate

-0.2%

GB Market


1 Year Return

41.0%

GRI

33.1%

GB Real Estate

6.1%

GB Market

Return vs Industry: GRI exceeded the UK Real Estate industry which returned 33.1% over the past year.

Return vs Market: GRI exceeded the UK Market which returned 6.1% over the past year.


Shareholder returns

GRIIndustryMarket
7 Day6.8%2.6%-0.2%
30 Day9.7%1.4%-2.7%
90 Day21.3%14.7%3.9%
1 Year43.6%41.0%36.5%33.1%11.8%6.1%
3 Year53.1%30.9%12.7%4.6%17.5%2.6%
5 Year93.7%60.6%27.2%12.4%34.8%3.7%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

16.69x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: GRI (£3.31) is trading above our estimate of fair value (£0.85)

Significantly Below Fair Value: GRI is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: GRI is poor value based on its PE Ratio (16.7x) compared to the Real Estate industry average (16.4x).

PE vs Market: GRI is good value based on its PE Ratio (16.7x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: GRI is poor value based on its PEG Ratio (1.8x)


Price to Book Ratio

PB vs Industry: GRI is overvalued based on its PB Ratio (1.7x) compared to the GB Real Estate industry average (1.2x).


Next Steps

Future Growth

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

9.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GRI's forecast earnings growth (9.2% per year) is above the savings rate (0.5%).

Earnings vs Market: GRI's earnings (9.2% per year) are forecast to grow slower than the UK market (12.2% per year).

High Growth Earnings: GRI's earnings are forecast to grow, but not significantly.

Revenue vs Market: GRI's revenue is expected to decline over the next 3 years (-15.4% per year).

High Growth Revenue: GRI's revenue is forecast to decline over the next 3 years (-15.4% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GRI's Return on Equity is forecast to be low in 3 years time (5.1%).


Next Steps

Past Performance

How has Grainger performed over the past 5 years?

14.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GRI has a large one-off gain of £52.3M impacting its September 30 2019 financial results.

Growing Profit Margin: GRI's current net profit margins (51.6%) are higher than last year (32.3%).


Past Earnings Growth Analysis

Earnings Trend: GRI's earnings have grown by 14.2% per year over the past 5 years.

Accelerating Growth: GRI's earnings growth over the past year (31.5%) exceeds its 5-year average (14.2% per year).

Earnings vs Industry: GRI earnings growth over the past year (31.5%) exceeded the Real Estate industry 2%.


Return on Equity

High ROE: GRI's Return on Equity (9.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Grainger's financial position?


Financial Position Analysis

Short Term Liabilities: GRI's short term assets (£929.8M) exceed its short term liabilities (£195.3M).

Long Term Liabilities: GRI's short term assets (£929.8M) do not cover its long term liabilities (£1.2B).


Debt to Equity History and Analysis

Debt Level: GRI's debt to equity ratio (105.8%) is considered high.

Reducing Debt: GRI's debt to equity ratio has reduced from 216.9% to 105.8% over the past 5 years.

Debt Coverage: GRI's debt is not well covered by operating cash flow (14.2%).

Interest Coverage: GRI's interest payments on its debt are well covered by EBIT (4.3x coverage).


Balance Sheet

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

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


Next Steps

Dividend

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

1.57%

Current Dividend Yield


Dividend Yield vs Market

company1.6%marketbottom25%1.8%markettop25%5.1%industryaverage2.4%forecastin3Years2.2%

Current dividend yield vs market & industry

Notable Dividend: GRI's dividend (1.57%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: GRI's dividend (1.57%) is low compared to the top 25% of dividend payers in the UK market (5.1%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (26.1%), GRI's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: GRI's dividends in 3 years are forecast to be covered by earnings (58.9% payout ratio).


Next Steps

Management

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

4.0yrs

Average management tenure


CEO

Helen Gordon (59yo)

4.1yrs

Tenure

UK£1,068,000

Compensation

Ms. Helen C. Gordon, MRICS, has been an Independent Non-Executive Director of Derwent London Plc since January 1, 2018. She has been the Chief Executive Officer at Grainger Plc since January 01, 2016. Ms.  ...


CEO Compensation Analysis

Compensation vs Market: Helen's total compensation ($USD1.39M) is below average for companies of similar size in the UK market ($USD2.22M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Helen Gordon
CEO & Executive Director4.1yrsUK£1.07m0.036% £802.2k
Vanessa Simms
CFO & Executive Director4yrsUK£674.00k0.0064% £142.3k
Andrew Saunderson
Director of Investment and PDMR0yrsno datano data
David Smith
Group Accounting Director0yrsno datano data
David Prescott
Director of Strategy & Corporate Finance1.5yrsno datano data
Kurt Mueller
Director of Corporate Affairs0yrsno datano data
Adam McGhin
Group General Counsel & Company Secretary0yrsno datano data
Manpreet Dillon
Director of Property Services & Compliance0yrsno datano data
Anish Thobhani
Customer Operations Director0yrsno datano data

4.0yrs

Average Tenure

59yo

Average Age

Experienced Management: GRI's management team is considered experienced (4 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Helen Gordon
CEO & Executive Director4.1yrsUK£1.07m0.036% £802.2k
Vanessa Simms
CFO & Executive Director4yrsUK£674.00k0.0064% £142.3k
Justin Read
Independent Non-Executive Director3yrsUK£56.00k0.0031% £68.0k
Mark Clare
Independent Non-Executive Chairman of the Board3yrsUK£165.00k0.022% £486.0k
Andrew C. Carr-Locke
Senior Independent Director2yrsUK£65.00k0.0022% £48.7k
Robert Wilkinson
Independent Non-­Executive Director4.3yrsUK£47.00k0.0031% £68.0k
Janette Bell
Independent Non-Executive Director1yrsUK£30.00kno data

3.0yrs

Average Tenure

57yo

Average Age

Experienced Board: GRI's board of directors are considered experienced (3 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.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 39%.


Top Shareholders

Company Information

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


Key Information

  • Name: Grainger plc
  • Ticker: GRI
  • Exchange: LSE
  • Founded: 1912
  • Industry: Real Estate Operating Companies
  • Sector: Real Estate
  • Market Cap: UK£2.223b
  • Shares outstanding: 670.90m
  • Website: https://www.graingerplc.co.uk

Number of Employees


Location

  • Grainger plc
  • Citygate
  • St James' Boulevard
  • Newcastle upon Tyne
  • Tyne and Wear
  • NE1 4JE
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
GRILSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
GRILBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
1U4DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992

Biography

Grainger plc, together with its subsidiaries, owns, develops, manages, and rents residential properties in the United Kingdom. The company operates through three segments: Residential, Development, and Funds. It also provides property and asset management services. The company was founded in 1912 and is headquartered in Newcastle upon Tyne, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 20:35
End of Day Share Price2020/02/14 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.