AIM:RCN

Stock Analysis Report

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Executive Summary

Redcentric plc provides IT managed services in the United Kingdom. More Details


Snowflake Analysis

Excellent balance sheet with moderate growth potential.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: RCN is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: RCN's weekly volatility (5%) has been stable over the past year.


Market Performance


7 Day Return

-0.8%

RCN

0.2%

GB IT

-0.6%

GB Market


1 Year Return

7.8%

RCN

10.7%

GB IT

-6.5%

GB Market

Return vs Industry: RCN underperformed the UK IT industry which returned 10.7% over the past year.

Return vs Market: RCN exceeded the UK Market which returned -6.5% over the past year.


Shareholder returns

RCNIndustryMarket
7 Day-0.8%0.2%-0.6%
30 Day2.6%7.1%5.2%
90 Day-6.4%15.2%15.1%
1 Year8.9%7.8%12.3%10.7%-2.7%-6.5%
3 Year31.2%26.5%74.9%66.4%5.1%-7.7%
5 Year-32.0%-35.5%173.6%146.7%46.8%18.2%

Long-Term Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

27.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RCN (£1.17) is trading below our estimate of fair value (£1.61)

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


Price To Earnings Ratio

PE vs Industry: RCN is unprofitable, so we can't compare its PE Ratio to the GB IT industry average.

PE vs Market: RCN is unprofitable, so we can't compare its PE Ratio to the UK market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate RCN's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: RCN's PB Ratio (2.6x) is in line with the GB IT industry average.


Next Steps

Future Growth

How is Redcentric forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

142.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RCN is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1%).

Earnings vs Market: RCN is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: RCN's is expected to become profitable in the next 3 years.

Revenue vs Market: RCN's revenue (3.7% per year) is forecast to grow slower than the UK market (6.5% per year).

High Growth Revenue: RCN's revenue (3.7% 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 RCN's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Redcentric performed over the past 5 years?

-43.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RCN is currently unprofitable.

Growing Profit Margin: RCN is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: RCN is unprofitable, and losses have increased over the past 5 years at a rate of 43.7% per year.

Accelerating Growth: Unable to compare RCN's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: RCN is unprofitable, making it difficult to compare its past year earnings growth to the IT industry (10.5%).


Return on Equity

High ROE: RCN has a negative Return on Equity (-12.9%), as it is currently unprofitable.


Next Steps

Financial Health

How is Redcentric's financial position?


Financial Position Analysis

Short Term Liabilities: RCN's short term assets (£25.0M) do not cover its short term liabilities (£31.9M).

Long Term Liabilities: RCN's short term assets (£25.0M) exceed its long term liabilities (£22.7M).


Debt to Equity History and Analysis

Debt Level: RCN's debt to equity ratio (4%) is considered satisfactory.

Reducing Debt: RCN's debt to equity ratio has reduced from 28.1% to 4% over the past 5 years.


Balance Sheet


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: Whilst unprofitable RCN has sufficient cash runway for more than 3 years if it maintains its current positive free cash flow level.

Forecast Cash Runway: RCN is unprofitable but has sufficient cash runway for more than 3 years, due to free cash flow being positive and growing by 43.5% per year.


Next Steps

Dividend

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

2.05%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: RCN's dividend (2.05%) is higher than the bottom 25% of dividend payers in the UK market (1.5%).

High Dividend: RCN's dividend (2.05%) is low compared to the top 25% of dividend payers in the UK market (4.55%).


Stability and Growth of Payments

Stable Dividend: RCN has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: RCN's dividend payments have increased, but the company has only paid a dividend for 7 years.


Current Payout to Shareholders

Dividend Coverage: RCN is paying a dividend but the company is unprofitable.


Future Payout to Shareholders

Future Dividend Coverage: RCN's dividends in 3 years are forecast to be well covered by earnings (33.5% payout ratio).


Next Steps

Management

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

2.2yrs

Average management tenure


CEO

Peter Brotherton (53 yo)

2.17yrs

Tenure

UK£529,000

Compensation

Mr. Peter James Brotherton, ACA has been Chief Executive Officer of Redcentric plc., since June 2019 and served as its Company Secretary at Redcentric plc since November 28, 2016. Mr. Brotherton served as ...


CEO Compensation Analysis

Compensation vs Market: Peter's total compensation ($USD726.21K) is about average for companies of similar size in the UK market ($USD585.10K).

Compensation vs Earnings: Peter's compensation has increased whilst the company is unprofitable.


Leadership Team

NamePositionTenureCompensationOwnership
Peter Brotherton
CEO & Executive Director2.17yrsUK£529.00k0.15%
£ 272.0k
David Senior
CFO & Director0.75yrno data0.028%
£ 51.3k
Mo Siddiqi
Chief Operating Officer4.25yrsno datano data
Harn Jagpal
Company Secretaryno datano datano data

2.2yrs

Average Tenure

Experienced Management: RCN's management team is considered experienced (2.2 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Peter Brotherton
CEO & Executive Director2.17yrsUK£529.00k0.15%
£ 272.0k
David Senior
CFO & Director0.75yrno data0.028%
£ 51.3k
Jonathan Kempster
Independent Non-Executive Director4yrsUK£44.00k0.0066%
£ 12.2k
Ian Johnson
Independent Non-Executive Chairman1.25yrsUK£39.00kno data
Stephen Vaughan
Senior Independent Non-Executive Director3.5yrsUK£49.00k0.013%
£ 23.8k

3.5yrs

Average Tenure

56yo

Average Age

Experienced Board: RCN's board of directors are considered experienced (3.5 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 5%.


Top Shareholders

Company Information

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


Key Information

  • Name: Redcentric plc
  • Ticker: RCN
  • Exchange: AIM
  • Founded: 1997
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: UK£185.795m
  • Shares outstanding: 156.13m
  • Website: https://www.redcentricplc.com

Number of Employees


Location

  • Redcentric plc
  • Central House
  • Beckwith Knowle
  • Harrogate
  • North Yorkshire
  • HG3 1UG
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RCNAIM (London Stock Exchange AIM Market)YesOrdinary SharesGBGBPApr 2013

Biography

Redcentric plc provides IT managed services in the United Kingdom. It offers network services, including connectivity, software-defined wide area network, local area network, managed wide area network, sec...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/01/21 19:29
End of Day Share Price2021/01/21 00:00
Earnings2020/09/30
Annual Earnings2020/03/31


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.