AIM:ARC

Stock Analysis Report

Executive Summary

Arcontech Group Plc, together with its subsidiaries, develops and sells proprietary software in the United Kingdom, rest of Europe, Africa, North America, and the Asia Pacific.

Rewards

PE ratio (26.6x) is below the Software industry average (31.6x)

Revenue is forecast to grow 6.79% per year

Earnings grew by 22.1% over the past year

Risk Analysis

Earnings are forecast to decline by an average of -0.8% per year for the next 3 years

Shareholders have been diluted in the past year

Does not have meaningful revenue (£3M)

Does not have a meaningful market cap (£30M)



Snowflake Analysis

Flawless balance sheet with proven track record.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

0%

ARC

2.7%

GB Software

1.4%

GB Market


1 Year Return

60.7%

ARC

25.6%

GB Software

12.4%

GB Market

Return vs Industry: ARC exceeded the UK Software industry which returned 24.8% over the past year.

Return vs Market: ARC exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

ARCIndustryMarket
7 Day0%2.7%1.4%
30 Day13.6%5.0%2.0%
90 Day23.6%17.0%8.8%
1 Year62.6%60.7%33.4%25.6%18.3%12.4%
3 Year355.5%339.0%17.0%-1.1%23.8%8.0%
5 Year1067.2%1025.0%65.3%36.3%41.8%8.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

26.6x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: ARC (£2.25) is trading above our estimate of fair value (£0.85)

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


Price To Earnings Ratio

PE vs Industry: ARC is good value based on its PE Ratio (26.6x) compared to the Software industry average (31.6x).

PE vs Market: ARC is poor value based on its PE Ratio (26.6x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: ARC's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: ARC is overvalued based on its PB Ratio (5.1x) compared to the GB Software industry average (3.5x).


Next Steps

Future Growth

How is Arcontech Group forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

-0.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ARC's earnings are forecast to decline over the next 3 years (-0.8% per year).

Earnings vs Market: ARC's earnings are forecast to decline over the next 3 years (-0.8% per year).

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

Revenue vs Market: ARC's revenue (6.8% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: ARC's revenue (6.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: ARC's Return on Equity is forecast to be low in 3 years time (16%).


Next Steps

Past Performance

How has Arcontech Group performed over the past 5 years?

32.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ARC has high quality earnings.

Growing Profit Margin: ARC's current net profit margins (37.7%) are higher than last year (36.3%).


Past Earnings Growth Analysis

Earnings Trend: ARC's earnings have grown significantly by 32.3% per year over the past 5 years.

Accelerating Growth: ARC's earnings growth over the past year (22.1%) is below its 5-year average (32.3% per year).

Earnings vs Industry: ARC earnings growth over the past year (22.1%) exceeded the Software industry 7%.


Return on Equity

High ROE: ARC's Return on Equity (19.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Arcontech Group's financial position?


Financial Position Analysis

Short Term Liabilities: ARC's short term assets (£4.3M) exceed its short term liabilities (£682.4K).

Long Term Liabilities: ARC has no long term liabilities.


Debt to Equity History and Analysis

Debt Level: ARC is debt free.

Reducing Debt: ARC has not had any debt for past 5 years.

Debt Coverage: ARC has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: ARC has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

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

Debt Coverage by Assets: Insufficient data to determine if ARC's debt is covered by short term assets.


Next Steps

Dividend

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

0.89%

Current Dividend Yield


Dividend Yield vs Market

company0.9%marketbottom25%1.8%markettop25%5.0%industryaverage2.5%forecastin3Years1.0%

Current dividend yield vs market & industry

Notable Dividend: ARC's dividend (0.89%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: ARC's dividend (0.89%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

Stable Dividend: ARC is not paying a notable dividend for the UK market, therefore no need to check if payments are stable.

Growing Dividend: ARC is not paying a notable dividend for the UK market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: ARC is not paying a notable dividend for the UK market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ARC's dividend in 3 years as they are not forecast to pay a notable one for the UK market.


Next Steps

Management

What is the CEO of Arcontech Group's salary, the management and board of directors tenure and is there insider trading?

12.9yrs

Average board tenure


CEO

Matthew Jeffs (57yo)

6.8yrs

Tenure

UK£236,756

Compensation

Mr. Matthew David Jeffs has been the Chief Executive Officer of Arcontech Group Plc since April 29, 2013. Mr. Jeffs spent ten years with Dow Jones and then six years with Reuters in a variety of roles. He  ...


CEO Compensation Analysis

Compensation vs Market: Matthew's total compensation ($USD307.86K) is about average for companies of similar size in the UK market ($USD326.78K).

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


Board Age and Tenure

12.9yrs

Average Tenure

62yo

Average Age

Experienced Board: ARC's board of directors are seasoned and experienced ( 12.9 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUK£240,31315 May 19
Richard Last
EntityIndividual
Role
Chairman of the Board
Group Chairman of the Board
Shares150,000
Max PriceUK£1.62
SellUK£29,21529 Mar 19
Matthew Jeffs
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Director
Shares24,109
Max PriceUK£1.21
BuyUK£55,07429 Mar 19
Matthew Jeffs
EntityIndividual
Role
Chief Executive Officer
CEO & Executive Director
Shares44,109
Max PriceUK£1.30

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3%.


Management Team

  • Steve Prout

    • Matthew Jeffs (57yo)

      CEO & Executive Director

      • Tenure: 6.8yrs
      • Compensation: UK£236.76k

    Board Members

    • Richard Last (62yo)

      Group Chairman of the Board

      • Tenure: 12.9yrs
      • Compensation: UK£34.40k
    • Louise Barton (69yo)

      Non-Executive Director

      • Tenure: 12.9yrs
      • Compensation: UK£22.94k
    • Matthew Jeffs (57yo)

      CEO & Executive Director

      • Tenure: 6.8yrs
      • Compensation: UK£236.76k

    Company Information

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


    Key Information

    • Name: Arcontech Group plc
    • Ticker: ARC
    • Exchange: AIM
    • Founded: 1979
    • Industry: Application Software
    • Sector: Software
    • Market Cap: UK£29.724m
    • Shares outstanding: 13.21m
    • Website: https://www.arcontech.com

    Number of Employees


    Location

    • Arcontech Group plc
    • 11-21 Paul Street
    • 1st Floor
    • London
    • Greater London
    • EC2A 4JU
    • United Kingdom

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    ARCAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPDec 2000

    Biography

    Arcontech Group Plc, together with its subsidiaries, develops and sells proprietary software in the United Kingdom, rest of Europe, Africa, North America, and the Asia Pacific. Its products include CityVision, a market data platform for real-time data reception, transformation, and publishing; CityVision Multi Vendor Contribution System, which enables the user to contribute data automatically and simultaneously to various destinations; and CityVision Cache, a real-time data repository. The company also offers Excelerator, a vendor independent system that enables real time reception and publishing of market data, as well as provides flexibility and control to manipulate data from various sources through Excel’s mathematical and display features. In addition, it provides CityVision Relay, a real-time data distribution engine; CityVision Symbol Mapper, a real-time data conversion system that allows market data managers to separate data integration from the data source; and CityVision API that develops real-time market data applications, as well as offers computer consultancy services. The company was formerly known as Knowledge Technology Solutions PLC and changed its name to Arcontech Group plc in February 2009. Arcontech Group plc was founded in 1979 and is based in London, the United Kingdom. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/18 20:37
    End of Day Share Price2020/01/17 00:00
    Earnings2019/06/30
    Annual Earnings2019/06/30


    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.