SEGRO (LSE:SGRO) - Share price, News & Analysis

Q: What is the Fair Price of SGRO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SGRO (£7.17) is trading below our estimate of [[fair value]] (£10.56)

SGRO fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	1/6
Past Performance	4/6
Financial Health	2/6
Dividends	5/6

SGRO Stock Overview

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, manager and developer of modern warehouses and light industrial property.

Rewards

Trading at 32.1% below our estimate of its fair value

Revenue is forecast to grow 7.73% per year

Earnings have grown 37.9% per year over the past 5 years

Pays a reliable dividend of 3.49%

Trading at good value vs. peer average Price-To-Earnings ratio

Trading at good value vs. industry average Price-To-Earnings ratio

Trading below our calculated fair Price-To-Earnings ratio

Risk Analysis

Earnings are forecast to decline by an average of 21.1% per year for the next 3 years

High level of non-cash earnings

SEGRO Competitors

Tritax Big Box REIT

LSE:BBOX

UK£2.4b

LondonMetric Property

LSE:LMP

UK£1.6b

Warehouse REIT

LSE:WHR

UK£447.8m

Urban Logistics REIT

LSE:SHED

UK£592.3m

Price History & Performance

Summary of all time highs, changes and price drops for SEGRO
Historical stock prices
Current Share Price	UK£7.17
52 Week High	UK£15.08
52 Week Low	UK£6.69
Beta	0.62
1 Month Change	-25.58%
3 Month Change	-25.00%
1 Year Change	-40.00%
3 Year Change	-9.88%
5 Year Change	34.27%
Change since IPO	-70.97%

Shareholder Returns

	SGRO	GB REITs	GB Market
7D	-10.9%	-11.3%	-4.1%
1Y	-40.0%	-31.1%	-16.2%

Return vs Industry: SGRO underperformed the UK REITs industry which returned -29.8% over the past year.

Return vs Market: SGRO underperformed the UK Market which returned -14.9% over the past year.

Price Volatility

Is SGRO's price volatile compared to industry and market?
SGRO volatility
SGRO Average Weekly Movement	5.6%
REITs Industry Average Movement	4.3%
Market Average Movement	5.3%
10% most volatile stocks in GB Market	10.7%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: SGRO is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: SGRO's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1920	385	David John Sleath	https://www.segro.com

SEGRO is a UK Real Estate Investment Trust (REIT), and a leading owner, manager and developer of modern warehouses and light industrial property. It owns or manages 8.1 million square metres of space (88 million square feet) valued at £13.3 billion serving customers from a wide range of industry sectors. Its properties are located in and around major cities and at key transportation hubs in the UK and in seven other European countries.

SEGRO Fundamentals Summary

How do SEGRO's earnings and revenue compare to its market cap?
SGRO fundamental statistics
Market Cap	UK£8.67b
Earnings (TTM)	UK£4.08b
Revenue (TTM)	UK£630.00m

2.1x

P/E Ratio

13.8x

P/S Ratio

Is SGRO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SGRO income statement (TTM)
Revenue	UK£630.00m
Cost of Revenue	UK£143.00m
Gross Profit	UK£487.00m
Other Expenses	-UK£3.59b
Earnings	UK£4.08b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

Feb 17, 2023

Earnings per share (EPS)	3.37
Gross Margin	77.30%
Net Profit Margin	646.98%
Debt/Equity Ratio	28.0%

How did SGRO perform over the long term?

See historical performance and comparison

Dividends

3.5%

Current Dividend Yield

57%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is SGRO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for SGRO?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SGRO. This is calculated by dividing SGRO's market cap by their current preferred multiple.
What is SGRO's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£8.67b

SGRO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	20.3x
Enterprise Value/EBITDA	29.2x
PEG Ratio	-0.1x

Price to Earnings Ratio vs Peers

How does SGRO's PE Ratio compare to its peers?

SGRO PE Ratio vs Peers

The above table shows the PE ratio for SGRO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	2.6x
BBOX Tritax Big Box REIT	2.3x	-0.8%	UK£2.4b
LMP LondonMetric Property	2.2x	-38.9%	UK£1.6b
WHR Warehouse REIT	2.3x	n/a	UK£447.8m
SHED Urban Logistics REIT	3.4x	-24.9%	UK£592.3m
SGRO SEGRO	2.1x	-21.1%	UK£8.7b

Price-To-Earnings vs Peers: SGRO is good value based on its Price-To-Earnings Ratio (2.1x) compared to the peer average (2.6x).

Price to Earnings Ratio vs Industry

How does SGRO's PE Ratio compare vs other companies in the GB REITs Industry?

Price-To-Earnings vs Industry: SGRO is good value based on its Price-To-Earnings Ratio (2.1x) compared to the UK REITs industry average (5.6x)

Price to Earnings Ratio vs Fair Ratio

What is SGRO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

SGRO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	2.1x
Fair PE Ratio	11.9x

Price-To-Earnings vs Fair Ratio: SGRO is good value based on its Price-To-Earnings Ratio (2.1x) compared to the estimated Fair Price-To-Earnings Ratio (11.9x).

Share Price vs Fair Value

What is the Fair Price of SGRO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SGRO (£7.17) is trading below our estimate of fair value (£10.56)

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

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is SEGRO forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-21.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SGRO's earnings are forecast to decline over the next 3 years (-21.1% per year).

Earnings vs Market: SGRO's earnings are forecast to decline over the next 3 years (-21.1% per year).

High Growth Earnings: SGRO's earnings are forecast to decline over the next 3 years.

Revenue vs Market: SGRO's revenue (7.7% per year) is forecast to grow faster than the UK market (4.5% per year).

High Growth Revenue: SGRO's revenue (7.7% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: SGRO's Return on Equity is forecast to be low in 3 years time (3.4%).

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Past Performance

How has SEGRO performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

37.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SGRO has a high level of non-cash earnings.

Growing Profit Margin: SGRO's current net profit margins are higher than last year .

Past Earnings Growth Analysis

Earnings Trend: SGRO's earnings have grown significantly by 37.9% per year over the past 5 years.

Accelerating Growth: SGRO's earnings growth over the past year (61.2%) exceeds its 5-year average (37.9% per year).

Earnings vs Industry: SGRO earnings growth over the past year (61.2%) underperformed the REITs industry 126.7%.

Return on Equity

High ROE: SGRO's Return on Equity (27.8%) is considered high.

Discover strong past performing companies

Financial Health

How is SEGRO's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: SGRO's short term assets (£445.0M) do not cover its short term liabilities (£627.0M).

Long Term Liabilities: SGRO's short term assets (£445.0M) do not cover its long term liabilities (£4.5B).

Debt to Equity History and Analysis

Debt Level: SGRO's net debt to equity ratio (27.4%) is considered satisfactory.

Reducing Debt: SGRO's debt to equity ratio has reduced from 35.9% to 28% over the past 5 years.

Debt Coverage: SGRO's debt is not well covered by operating cash flow (8%).

Interest Coverage: SGRO's interest payments on its debt are not well covered by EBIT (1.9x coverage).

Balance Sheet

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Dividend

What is SEGRO current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.49%

Current Dividend Yield

Dividend Yield vs Market

SEGRO Dividend Yield vs Market

How does SEGRO dividend yield compare to the market?
Segment	Dividend Yield
Company (SEGRO)	3.5%
Market Bottom 25% (GB)	2.1%
Market Top 25% (GB)	6.3%
Industry Average (REITs)	5.0%
Analyst forecast in 3 Years (SEGRO)	4.2%

Notable Dividend: SGRO's dividend (3.49%) is higher than the bottom 25% of dividend payers in the UK market (2.12%).

High Dividend: SGRO's dividend (3.49%) is low compared to the top 25% of dividend payers in the UK market (6.08%).

Stability and Growth of Payments

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

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

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (56.5%), SGRO's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (93.3%), SGRO's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

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

10.8yrs

Average management tenure

CEO

David John Sleath (61 yo)

16.67yrs

Tenure

UK£5,216,000

Compensation

Mr. David John Rivers Sleath, OBE, has been the Chief Executive Officer at SEGRO Plc since April 28, 2011. Mr. Sleath serves as Non-Executive Director of RS Group plc (formerly known as Electrocomponents p...

CEO Compensation Analysis

David John Sleath's Compensation vs SEGRO Earnings

How has David John Sleath's remuneration changed compared to SEGRO's earnings?
Date	Total Comp.	Salary	Company Earnings
Jun 30 2022	n/a	n/a	UK£4b
Mar 31 2022	n/a	n/a	UK£4b
Dec 31 2021	UK£5m	UK£721k	UK£4b
Sep 30 2021	n/a	n/a	UK£3b
Jun 30 2021	n/a	n/a	UK£3b
Mar 31 2021	n/a	n/a	UK£2b
Dec 31 2020	UK£4m	UK£663k	UK£1b
Sep 30 2020	n/a	n/a	UK£1b
Jun 30 2020	n/a	n/a	UK£678m
Mar 31 2020	n/a	n/a	UK£768m
Dec 31 2019	UK£7m	UK£678k	UK£858m
Sep 30 2019	n/a	n/a	UK£880m
Jun 30 2019	n/a	n/a	UK£901m
Mar 31 2019	n/a	n/a	UK£982m
Dec 31 2018	UK£4m	UK£633k	UK£1b
Sep 30 2018	n/a	n/a	UK£1b
Jun 30 2018	n/a	n/a	UK£1b
Mar 31 2018	n/a	n/a	UK£1b
Dec 31 2017	UK£4m	UK£615k	UK£953m
Sep 30 2017	n/a	n/a	UK£781m
Jun 30 2017	n/a	n/a	UK£609m
Mar 31 2017	n/a	n/a	UK£514m
Dec 31 2016	UK£2m	UK£597k	UK£418m
Sep 30 2016	n/a	n/a	UK£482m
Jun 30 2016	n/a	n/a	UK£547m
Mar 31 2016	n/a	n/a	UK£615m
Dec 31 2015	UK£2m	UK£579k	UK£683m

Compensation vs Market: David John's total compensation ($USD5.75M) is above average for companies of similar size in the UK market ($USD3.26M).

Compensation vs Earnings: David John's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: SGRO's management team is seasoned and experienced (10.8 years average tenure).

Board Members

Experienced Board: SGRO's board of directors are considered experienced (4.5 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: SGRO insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

LSE:SGRO Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Shares	Max Price
14 Sep 22	BuyUK£198,702	Andrew Harrison	Individual	22,271	UK£8.92
17 Jun 22	BuyUK£397,017	Andrew Harrison	Individual	40,199	UK£9.88
11 May 22	BuyUK£29,990	Mary Barnard	Individual	2,745	UK£10.93

Ownership Breakdown

What is the ownership structure of SGRO?
Owner Type	Number of Shares	Ownership Percentage
Employee Share Scheme	436,641	0.04%
Public Companies	441,606	0.04%
Private Companies	1,715,625	0.1%
Individual Insiders	2,418,876	0.2%
State or Government	3,156,132	0.3%
General Public	138,921,592	11.5%
Institutions	1,061,808,457	87.8%

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

Top Shareholders

Top 25 shareholders own 57.75% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
8.77%	BlackRock, Inc.	106,074,666	£760.6m	-18.73%	0.02%
5.66%	Stichting Pensioenfonds ABP	68,466,273	£490.9m	0.77%	0.73%
5.47%	Norges Bank Investment Management	66,094,564	£473.9m	4.67%	0.07%
4.59%	The Vanguard Group, Inc.	55,445,300	£397.5m	2.3%	0.01%
3.99%	State Street Global Advisors, Inc.	48,289,774	£346.2m	-1.16%	0.02%
3.01%	Legal & General Investment Management Limited	36,342,665	£260.6m	0.25%	0.08%
2.66%	Royal London Asset Management Limited	32,121,814	£230.3m	8.33%	0.47%
2.26%	Amundi Asset Management	27,307,937	£195.8m	-3.68%	0.06%
2.2%	Alecta Pensionsförsäkring, ömsesidigt	26,624,982	£190.9m	0%	0.59%
2.14%	Principal Global Investors, LLC	25,819,004	£185.1m	17.35%	0.14%
1.99%	UBS Asset Management	24,029,438	£172.3m	20.43%	0.04%
1.88%	HSBC Global Asset Management (UK) Limited	22,744,084	£163.1m	108.52%	0.14%
1.73%	PGGM	20,891,823	£149.8m	-9.11%	0.94%
1.43%	Dimensional Fund Advisors LP	17,297,804	£124.0m	8.64%	0.03%
1.41%	BNP Paribas, Private & Investment Banking Investments	17,075,653	£122.4m	499.1%	0.88%
1.17%	abrdn plc	14,137,971	£101.4m	-24.6%	0.11%
1.07%	Northern Trust Global Investments	12,988,151	£93.1m	-5.37%	0.02%
0.94%	Artemis Investment Management LLP	11,417,294	£81.9m	-0.85%	0.4%
0.91%	AXA Investment Managers S.A.	11,036,123	£79.1m	-2.51%	0.18%
0.86%	Janus Henderson Group plc	10,423,304	£74.7m	2.07%	0.04%
0.8%	Pictet Asset Management Limited	9,681,138	£69.4m	-5.93%	0.07%
0.75%	William Blair Investment Management, LLC	9,111,845	£65.3m	-13.43%	0.13%
0.73%	Ignis Investment Services Limited	8,869,843	£63.6m	-4.62%	0.26%
0.66%	Deutsche Asset & Wealth Management	7,943,697	£57.0m	-18.97%	0.03%
0.65%	Cohen & Steers Capital Management, Inc.	7,844,918	£56.2m	-25.07%	0.12%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
SGRO	ENXTPA (Euronext Paris)	Yes	Ordinary Shares	FR	EUR	Jan 1992
SEGX.F	OTCPK (Pink Sheets LLC)	Yes	Ordinary Shares	US	USD	Jan 1992
SGRO	LSE (London Stock Exchange)	Yes	Ordinary Shares	GB	GBP	Jan 1992
S4VC	DB (Deutsche Boerse AG)	Yes	Ordinary Shares	DE	EUR	Jan 1992
SGROL	BATS-CHIXE (BATS 'Chi-X Europe')	Yes	Ordinary Shares	GB	GBP	Jan 1992
SGRO N	BMV (Bolsa Mexicana de Valores)	Yes	Ordinary Shares	MX	MXN	Jan 1992

Data	Last Updated (UTC time)
Company Analysis	2022/09/29 00:00
End of Day Share Price	2022/09/29 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31