LSE:KNOS

Stock Analysis Report

Executive Summary

Kainos Group plc provides digital technology services and platforms for public and private organizations worldwide.

Rewards

Trading at 6.9% below its fair value

Earnings are forecast to grow 9.21% per year

Earnings grew by 49.2% over the past year

Risk Analysis

High level of non-cash earnings

Highly volatile share price over past 3 months



Snowflake Analysis

Flawless balance sheet with solid track record.


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Share Price & News

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


Latest Share Price and Events

Stable Share Price: KNOS's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

6.5%

KNOS

2.3%

GB IT

1.4%

GB Market


1 Year Return

106.0%

KNOS

40.1%

GB IT

12.4%

GB Market

Return vs Industry: KNOS exceeded the UK IT industry which returned 42.2% over the past year.

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


Shareholder returns

KNOSIndustryMarket
7 Day6.5%2.3%1.4%
30 Day11.4%0.9%2.0%
90 Day66.1%17.2%8.8%
1 Year110.3%106.0%43.3%40.1%18.3%12.4%
3 Year328.8%303.9%112.6%98.1%23.8%8.0%
5 Yearn/a114.1%92.9%41.8%8.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

4.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: KNOS (£8.04) is trading below our estimate of fair value (£8.64)

Significantly Below Fair Value: KNOS is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: KNOS is poor value based on its PE Ratio (48.9x) compared to the IT industry average (29.2x).

PE vs Market: KNOS is poor value based on its PE Ratio (48.9x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: KNOS is poor value based on its PEG Ratio (5.3x)


Price to Book Ratio

PB vs Industry: KNOS is overvalued based on its PB Ratio (16.3x) compared to the GB IT industry average (2.8x).


Next Steps

Future Growth

How is Kainos Group forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

9.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

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

Earnings vs Market: KNOS's earnings (9.2% per year) are forecast to grow slower than the UK market (11.7% per year).

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

Revenue vs Market: KNOS's revenue (6.7% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: KNOS's revenue (6.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KNOS's Return on Equity is forecast to be high in 3 years time (30.3%)


Next Steps

Past Performance

How has Kainos Group performed over the past 5 years?

13.0%

Historical annual earnings growth


Earnings and Revenue History

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

Growing Profit Margin: KNOS's current net profit margins (11.5%) are higher than last year (10.7%).


Past Earnings Growth Analysis

Earnings Trend: KNOS's earnings have grown by 13% per year over the past 5 years.

Accelerating Growth: KNOS's earnings growth over the past year (49.2%) exceeds its 5-year average (13% per year).

Earnings vs Industry: KNOS earnings growth over the past year (49.2%) exceeded the IT industry 12.3%.


Return on Equity

High ROE: KNOS's Return on Equity (33.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Kainos Group's financial position?


Financial Position Analysis

Short Term Liabilities: KNOS's short term assets (£85.7M) exceed its short term liabilities (£38.4M).

Long Term Liabilities: KNOS's short term assets (£85.7M) exceed its long term liabilities (£5.2M).


Debt to Equity History and Analysis

Debt Level: KNOS is debt free.

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

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

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


Balance Sheet

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

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


Next Steps

Dividend

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

1.13%

Current Dividend Yield


Dividend Yield vs Market

company1.1%marketbottom25%1.8%markettop25%5.0%industryaverage2.0%forecastin3Years1.4%

Current dividend yield vs market & industry

Notable Dividend: KNOS's dividend (1.16%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: KNOS's dividend (1.16%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

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

Growing Dividend: KNOS's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (60.8%), KNOS's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: KNOS's dividends in 3 years are forecast to be covered by earnings (59.5% payout ratio).


Next Steps

Management

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

10.1yrs

Average management tenure


CEO

Brendan Mooney (52yo)

19yrs

Tenure

UK£603,000

Compensation

Dr. Brendan Mooney has been the Chief Executive Officer of Kainos Group plc since 2001. Dr. Mooney is responsible for setting the strategic direction of Kainos and for overseeing profitable growth. He has  ...


CEO Compensation Analysis

Compensation vs Market: Brendan's total compensation ($USD784.08K) is below average for companies of similar size in the UK market ($USD1.85M).

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


Management Age and Tenure

10.1yrs

Average Tenure

51yo

Average Age

Experienced Management: KNOS's management team is seasoned and experienced (10.1 years average tenure).


Insider Trading

Insider Buying: KNOS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUK£8,700,00029 Nov 19
Richard McCann
EntityIndividual
Role
Member of the Board of Directors
CFO, COO & Executive Director
Shares1,500,000
Max PriceUK£5.80
SellUK£820,95017 Jun 19
Paul Gannon
EntityIndividual
Role
Member of the Board of Directors
Senior VP of Business Development & Executive Director
Shares130,500
Max PriceUK£6.29

Ownership Breakdown

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


Management Team

  • Brendan Mooney (52yo)

    CEO & Executive Director

    • Tenure: 19yrs
    • Compensation: UK£603.00k
  • Grainne Burns (45yo)

    General Counsel & Company Secretary

    • Tom Gray (51yo)

      Chief Technology Officer

      • Tenure: 15yrs
    • Paul Gannon (56yo)

      Senior VP of Business Development & Executive Director

      • Compensation: UK£587.00k
    • Richard McCann (54yo)

      CFO, COO & Executive Director

      • Compensation: UK£544.00k
    • Kristian Rude

      Head of Copenhagen Office

      • Tenure: 2.3yrs
    • Mal Smith (50yo)

      Head of WorkSmart Division

      • Colette Kidd (45yo)

        Chief People Officer

        • Tenure: 5.2yrs
      • Peter McKeown

        Deputy Chief Financial Officer


        Board Members

        • Andy Malpass (57yo)

          Senior Independent Non-Executive Director

          • Compensation: UK£56.00k
        • Tom Burnet (51yo)

          Independent Chairman

          • Tenure: 0.3yrs
          • Compensation: UK£44.00k
        • Brendan Mooney (52yo)

          CEO & Executive Director

          • Tenure: 19yrs
          • Compensation: UK£603.00k
        • Paul Gannon (56yo)

          Senior VP of Business Development & Executive Director

          • Compensation: UK£587.00k
        • Chris Cowan (60yo)

          Independent Non-Executive Director

          • Compensation: UK£40.00k
        • Richard McCann (54yo)

          CFO, COO & Executive Director

          • Compensation: UK£544.00k
        • Katie Davis

          Independent Non-Executive Director

          • Tenure: 0.2yrs

        Company Information

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


        Key Information

        • Name: Kainos Group plc
        • Ticker: KNOS
        • Exchange: LSE
        • Founded: 1986
        • Industry: IT Consulting and Other Services
        • Sector: Software
        • Market Cap: UK£1.004b
        • Shares outstanding: 121.87m
        • Website: https://www.kainos.com

        Number of Employees


        Location

        • Kainos Group plc
        • Kainos House
        • 4-6 Upper Crescent
        • Belfast
        • County Antrim
        • BT7 1NT
        • United Kingdom

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        KNOSLSE (London Stock Exchange)YesOrdinary SharesGBGBPJul 2015
        1KGDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 2015
        KNOSLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJul 2015
        KNNN.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJul 2015

        Biography

        Kainos Group plc provides digital technology services and platforms for public and private organizations worldwide. It operates through two divisions, Digital Services and Digital Platforms. The Digital Services division delivers customized online digital solutions principally for central, regional, and local government departments and agencies, as well as for commercial sector organizations. It also provides consulting, project management, integration, and post deployment services for Workday’s software suite, which includes cloud-based software for human capital management and financial management that enables enterprises to organize their staff and to support financial reporting requirements. The Digital Platforms division offers Smart, a proprietary software tool that allows Workday customers to automatically verify their Workday configuration during implementation and in live operations. It also provides Evolve Electronic Medical Record, a proprietary software product that removes paper from the care process by digitizing NHS patient records. The company was founded in 1986 and is headquartered in Belfast, 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 21:49
        End of Day Share Price2020/01/17 00:00
        Earnings2019/09/30
        Annual Earnings2019/03/31


        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.