AIM:GAMA

Stock Analysis Report

Executive Summary

Gamma Communications plc provides voice, data, and mobile services for the business market in the United Kingdom.

Rewards

Trading at 2.4% below its fair value

Earnings are forecast to grow 3.45% per year

Earnings grew by 38.5% over the past year

Risk Analysis

No risks detected for GAMA from our risk checks.


Snowflake Analysis

Outstanding track record with flawless balance sheet.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

2.7%

GAMA

-2.9%

GB Telecom

1.4%

GB Market


1 Year Return

71.8%

GAMA

-15.3%

GB Telecom

12.4%

GB Market

Return vs Industry: GAMA exceeded the UK Telecom industry which returned -11.8% over the past year.

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


Shareholder returns

GAMAIndustryMarket
7 Day2.7%-2.9%1.4%
30 Day5.1%-6.3%2.3%
90 Day20.2%-6.9%8.8%
1 Year73.3%71.8%-8.9%-15.3%18.3%12.4%
3 Year189.1%179.7%-35.7%-46.5%23.8%8.0%
5 Year466.4%428.6%-39.9%-53.4%41.8%8.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

2.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: GAMA (£13.35) is trading below our estimate of fair value (£13.68)

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


Price To Earnings Ratio

PE vs Industry: GAMA is poor value based on its PE Ratio (37.2x) compared to the Telecom industry average (36.7x).

PE vs Market: GAMA is poor value based on its PE Ratio (36.7x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: GAMA is poor value based on its PEG Ratio (10.6x)


Price to Book Ratio

PB vs Industry: GAMA is overvalued based on its PB Ratio (9.3x) compared to the GB Telecom industry average (3.9x).


Next Steps

Future Growth

How is Gamma Communications forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

3.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: GAMA's forecast earnings growth (3.5% per year) is above the savings rate (0.5%).

Earnings vs Market: GAMA's earnings (3.5% per year) are forecast to grow slower than the UK market (11.7% per year).

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

Revenue vs Market: GAMA's revenue (7.4% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: GAMA's revenue (7.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: GAMA's Return on Equity is forecast to be high in 3 years time (24.4%)


Next Steps

Past Performance

How has Gamma Communications performed over the past 5 years?

22.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: GAMA has high quality earnings.

Growing Profit Margin: GAMA's current net profit margins (11.2%) are higher than last year (9.4%).


Past Earnings Growth Analysis

Earnings Trend: GAMA's earnings have grown significantly by 22.7% per year over the past 5 years.

Accelerating Growth: GAMA's earnings growth over the past year (38.5%) exceeds its 5-year average (22.7% per year).

Earnings vs Industry: GAMA earnings growth over the past year (38.5%) exceeded the Telecom industry 0.5%.


Return on Equity

High ROE: GAMA's Return on Equity (25.3%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Gamma Communications's financial position?


Financial Position Analysis

Short Term Liabilities: GAMA's short term assets (£130.6M) exceed its short term liabilities (£62.2M).

Long Term Liabilities: GAMA's short term assets (£130.6M) exceed its long term liabilities (£23.5M).


Debt to Equity History and Analysis

Debt Level: GAMA is debt free.

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

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

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


Balance Sheet

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

Debt Coverage by Assets: GAMA's debt is not covered by short term assets (assets are -7.3521263916821E+16x debt).


Next Steps

Dividend

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

0.69%

Current Dividend Yield


Dividend Yield vs Market

company0.7%marketbottom25%1.8%markettop25%5.0%industryaverage7.4%forecastin3Years0.9%

Current dividend yield vs market & industry

Notable Dividend: GAMA's dividend (0.7%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: GAMA's dividend (0.7%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

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

Growing Dividend: GAMA 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: GAMA is not paying a notable dividend for the UK market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of GAMA'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 Gamma Communications's salary, the management and board of directors tenure and is there insider trading?

1.7yrs

Average management tenure


CEO

Andrew Taylor (50yo)

1.7yrs

Tenure

UK£846,373

Compensation

Mr. Andrew George Taylor has been Chief Executive officer and Director of Gamma Communications plc since May 23, 2018 and April 4, 2018. Mr. Taylor is the Chief Executive Officer and Director of Gamma Tele ...


CEO Compensation Analysis

Compensation vs Market: Andrew's total compensation ($USD1.10M) is below average for companies of similar size in the UK market ($USD1.85M).

Compensation vs Earnings: Insufficient data to compare Andrew's compensation with company performance.


Management Age and Tenure

1.7yrs

Average Tenure

49yo

Average Age

Experienced Management: GAMA's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Age and Tenure

5.6yrs

Average Tenure

60yo

Average Age

Experienced Board: GAMA's board of directors are considered experienced (5.6 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUK£409,68803 Jan 20
Andrew Stone
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Non-Executive Director
Shares30,000
Max PriceUK£13.74
SellUK£1,165,04624 Dec 19
Andrew Stone
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Non-Executive Director
Shares90,000
Max PriceUK£13.00
SellUK£118,23019 Dec 19
Andrew Stone
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Non-Executive Director
Shares10,000
Max PriceUK£11.82
SellUK£1,249,93704 Dec 19
Andrew Stone
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Non-Executive Director
Shares100,000
Max PriceUK£12.55
BuyUK£11,00030 Apr 19
Henrietta Marsh
EntityIndividual
Role
Member of the Board of Directors
Non-Executive Director
Shares1,000
Max PriceUK£11.00
SellUK£2,190,00017 Apr 19
Andrew Stone
EntityIndividual
Role
Member of the Board of Directors
Non-Independent Non-Executive Director
Shares200,000
Max PriceUK£10.95

Ownership Breakdown

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


Management Team

  • Dave Macfarlane (51yo)

    Managing Director – UK Direct

    • Andy Morris (48yo)

      Chief Strategy & Operating Officer

      • Andrew Scott Belshaw (45yo)

        CFO & Executive Director

        • Tenure: 5.3yrs
        • Compensation: UK£732.50k
      • Justin Coombes

        Head of Marketing

        • James Bushell

          Head of Product Management

          • Daryl Pile

            Managing Director – UK Indirect

            • Pam Williams

              Human Resource Director

              • Danny Jacobs

                Head of Channel Support

                • Andrew Taylor (50yo)

                  CEO & Director

                  • Tenure: 1.7yrs
                  • Compensation: UK£846.37k
                • Phil Stubbs

                  Chief Technology Officer

                  • Tenure: 1.3yrs

                Board Members

                • Het Marsh (59yo)

                  Non-Executive Director

                  • Tenure: 0.8yrs
                • Long Wu (66yo)

                  Non-Independent Non-Executive Director

                  • Tenure: 9yrs
                  • Compensation: UK£36.41k
                • Richard Last (62yo)

                  Independent Non-Executive Chairman

                  • Compensation: UK£78.03k
                • Martin Robert Lea (61yo)

                  Independent Non-Executive Director

                  • Tenure: 5.6yrs
                  • Compensation: UK£48.41k
                • Alan Gibbins (69yo)

                  Independent Non-Executive Director

                  • Tenure: 5.6yrs
                  • Compensation: UK£42.41k
                • Andrew Stone (48yo)

                  Non-Independent Non-Executive Director

                  • Tenure: 9yrs
                  • Compensation: UK£36.41k
                • Andrew Scott Belshaw (45yo)

                  CFO & Executive Director

                  • Tenure: 5.3yrs
                  • Compensation: UK£732.50k
                • Andrew Taylor (50yo)

                  CEO & Director

                  • Tenure: 1.7yrs
                  • Compensation: UK£846.37k

                Company Information

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


                Key Information

                • Name: Gamma Communications plc
                • Ticker: GAMA
                • Exchange: AIM
                • Founded: 2001
                • Industry: Alternative Carriers
                • Sector: Telecom
                • Market Cap: UK£1.270b
                • Shares outstanding: 94.78m
                • Website: https://www.gamma.co.uk

                Number of Employees


                Location

                • Gamma Communications plc
                • Kings House
                • Kings Road West
                • Newbury
                • Berkshire
                • RG14 5BY
                • United Kingdom

                Listings

                TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
                GAMAAIM (London Stock Exchange AIM Market)YesNew Ordinary SharesGBGBPOct 2014
                6GCDB (Deutsche Boerse AG)YesNew Ordinary SharesDEEUROct 2014

                Biography

                Gamma Communications plc provides voice, data, and mobile services for the business market in the United Kingdom. Its voice services include hosted phone system, horizon call center, connect, PBX v hosted, SIP trunk, inbound, call and line, and SIP trunk call manager; and data services comprise broadband, fiber broadband, assured and converged broadband, fiber Ethernet, Ethernet in the first mile, fiber to the cabinet (FTTC) Ethernet, converged FTTC broadband, converged Ethernet, and converged private network services. The company’s mobile services include fixed/mobile convergence services, pay-as-you-use, single and shared users and unlimited, as well as a bolt-ons including text, business mobile data, international roaming, and multinet services; and cloud services, which consists of cloud compute and back up. It serves SMEs, mid-size businesses, and enterprises, as well as education, healthcare, and housing industries, as well as governments. The company offers its services through a network of channel partners, as well as directly to end users. Gamma Communications plc was founded in 2001 and is headquartered in Newbury, the United Kingdom. 


                Company Analysis and Financial Data Status

                All financial data provided by Standard & Poor's Capital IQ.
                DataLast Updated (UTC time)
                Company Analysis2020/01/17 21:34
                End of Day Share Price2020/01/17 00:00
                Earnings2019/06/30
                Annual Earnings2018/12/31


                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.