LSE:RSW

Stock Analysis Report

Executive Summary

Renishaw plc, an engineering and scientific technology company, designs, manufactures, distributes, sells, and services metrology and healthcare products worldwide.

Rewards

Trading at 67.3% below its fair value

Earnings are forecast to grow 7.79% per year

Risk Analysis

No risks detected for RSW from our risk checks.


Snowflake Analysis

Excellent balance sheet second-rate dividend payer.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

10.9%

RSW

0.4%

GB Electronic

-3.0%

GB Market


1 Year Return

-4.5%

RSW

21.8%

GB Electronic

11.0%

GB Market

Return vs Industry: RSW underperformed the UK Electronic industry which returned 21.7% over the past year.

Return vs Market: RSW underperformed the UK Market which returned 12.7% over the past year.


Shareholder returns

RSWIndustryMarket
7 Day10.9%0.4%-3.0%
30 Day4.2%-0.9%-2.4%
90 Day9.4%11.2%3.9%
1 Year-2.9%-4.5%23.8%21.8%16.8%11.0%
3 Year49.7%43.7%64.0%56.4%20.0%4.7%
5 Year88.5%73.4%125.9%107.1%38.9%6.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RSW (£37) is trading below our estimate of fair value (£113.11)

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


Price To Earnings Ratio

PE vs Industry: RSW is poor value based on its PE Ratio (29.2x) compared to the Electronic industry average (21.5x).

PE vs Market: RSW is poor value based on its PE Ratio (29.2x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: RSW is poor value based on its PEG Ratio (3.7x)


Price to Book Ratio

PB vs Industry: RSW is overvalued based on its PB Ratio (4.6x) compared to the GB Electronic industry average (2.4x).


Next Steps

Future Growth

How is Renishaw forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

7.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RSW's forecast earnings growth (7.8% per year) is above the savings rate (0.5%).

Earnings vs Market: RSW's earnings (7.8% per year) are forecast to grow slower than the UK market (11.7% per year).

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

Revenue vs Market: RSW's revenue (2.6% per year) is forecast to grow slower than the UK market (3.6% per year).

High Growth Revenue: RSW's revenue (2.6% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RSW's Return on Equity is forecast to be low in 3 years time (17.3%).


Next Steps

Past Performance

How has Renishaw performed over the past 5 years?

5.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RSW has high quality earnings.

Growing Profit Margin: RSW's current net profit margins (16.1%) are lower than last year (21.6%).


Past Earnings Growth Analysis

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

Accelerating Growth: RSW's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: RSW had negative earnings growth (-30.3%) over the past year, making it difficult to compare to the Electronic industry average (-20.7%).


Return on Equity

High ROE: RSW's Return on Equity (15.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Renishaw's financial position?


Financial Position Analysis

Short Term Liabilities: RSW's short term assets (£408.3M) exceed its short term liabilities (£95.6M).

Long Term Liabilities: RSW's short term assets (£408.3M) exceed its long term liabilities (£97.0M).


Debt to Equity History and Analysis

Debt Level: RSW's debt to equity ratio (1.8%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if RSW's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: RSW's debt is well covered by operating cash flow (1024%).

Interest Coverage: RSW earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

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

Debt Coverage by Assets: RSW's debt is covered by short term assets (assets are 39.3x debt).


Next Steps

Dividend

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

1.47%

Current Dividend Yield


Dividend Yield vs Market

company1.5%marketbottom25%1.9%markettop25%5.1%industryaverage1.4%forecastin3Years1.6%

Current dividend yield vs market & industry

Notable Dividend: RSW's dividend (1.62%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: RSW's dividend (1.62%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (47.3%), RSW's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RSW's dividends in 3 years are forecast to be well covered by earnings (45.2% payout ratio).


Next Steps

Management

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

1.9yrs

Average management tenure


CEO

Will Lee 0

1.9yrs

Tenure

UK£653,000

Compensation

Mr. William Lee, also known as Will, has been the Chief Executive of Renishaw plc since February 2018 and has been its Member of the Executive Board since December 2015. Mr. Lee is responsible for the prod ...


CEO Compensation Analysis

Compensation vs Market: Will's total compensation ($USD849.10K) is below average for companies of similar size in the UK market ($USD2.25M).

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


Management Age and Tenure

1.9yrs

Average Tenure

67.5yo

Average Age

Experienced Management: RSW's management team is not considered experienced ( 1.9 years average tenure), which suggests a new team.


Board Age and Tenure

6.8yrs

Average Tenure

69.5yo

Average Age

Experienced Board: RSW's board of directors are considered experienced (6.8 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.


Ownership Breakdown

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


Management Team

  • David Deer (81yo)

    Co-Founder

    • Compensation: UK£458.00k
  • David McMurtry (79yo)

    Co-Founder

    • Compensation: UK£703.00k
  • Allen C. Roberts (70yo)

    Group Finance Director

    • Tenure: 39.3yrs
    • Compensation: UK£491.00k
  • Dave Wallace (48yo)

    GM of CMM Products Dvision

    • Tenure: 12yrs
  • Leo Somerville (61yo)

    Member of Executive Board

    • Tenure: 16yrs
  • Jean-Marc Meffre (65yo)

    Member of Executive Board

    • Mark Moloney

      Member of the Executive Board

      • Tenure: 1.9yrs
    • Will Lee

      Chief Executive

      • Tenure: 1.9yrs
      • Compensation: UK£653.00k
    • Gareth Hankins

      Director of Group Manufacturing Services Division & Member of the Executive Board

      • Tenure: 1.9yrs
    • Jacqueline Conway

      General Counsel & Company Secretary

      • Tenure: 0.2yrs

    Board Members

    • David Deer (81yo)

      Co-Founder

      • Compensation: UK£458.00k
    • Carol Chesney (56yo)

      Non-Executive Director

      • Tenure: 7.3yrs
      • Compensation: UK£55.00k
    • David McMurtry (79yo)

      Co-Founder

      • Compensation: UK£703.00k
    • Allen C. Roberts (70yo)

      Group Finance Director

      • Tenure: 39.3yrs
      • Compensation: UK£491.00k
    • John Jeans (69yo)

      Non-Executive Director

      • Tenure: 6.8yrs
      • Compensation: UK£56.00k
    • Catherine Glickman (61yo)

      Non-Executive Director

      • Tenure: 1.4yrs
    • David Grant (71yo)

      Senior Independent Director

      • Compensation: UK£55.00k
    • Sean Hymas (53yo)

      President & Representative Director of Renishaw KK

      • Will Lee

        Chief Executive

        • Tenure: 1.9yrs
        • Compensation: UK£653.00k

      Company Information

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


      Key Information

      • Name: Renishaw plc
      • Ticker: RSW
      • Exchange: LSE
      • Founded: 1973
      • Industry: Electronic Equipment and Instruments
      • Sector: Tech
      • Market Cap: UK£2.966b
      • Shares outstanding: 72.78m
      • Website: https://www.renishaw.com

      Number of Employees


      Location

      • Renishaw plc
      • New Mills
      • Wotton-under-Edge
      • Gloucestershire
      • GL12 8JR
      • United Kingdom

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      RSWLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
      REWDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
      RNSH.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
      RSWLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
      RNSH.YOTCPK (Pink Sheets LLC)UNSPONSORD ADRUSUSDAug 2013

      Biography

      Renishaw plc, an engineering and scientific technology company, designs, manufactures, distributes, sells, and services metrology and healthcare products worldwide. The company offers metrology products, including additive manufacturing systems, co-ordinate measuring machine products, machine tool probe systems, styli for probe systems, performance testing products, gauging systems, fixtures, and position encoders. It also provides healthcare products, such as craniomaxillofacial custom-made implants, dental scanners, dental computer-aided design software, neurosurgical robots, neurosurgical planning software, neurosurgical implants, neurosurgical accessories, Raman microscopes, and hybrid Raman systems, as well as dental structures manufacturing, and biological and pharmaceutical services. In addition, the company offers travel agency services. It serves the aerospace, automotive, construction, consumer products, power generation, agriculture, healthcare, resource exploration, electronics, heavy, precision manufacturing, and medical industries, as well as scientific, research, and analysis industries. The company was founded in 1973 and is headquartered in Wotton-under-Edge, the United Kingdom. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/27 20:35
      End of Day Share Price2020/01/27 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.