LSE:RMG

Stock Analysis Report

Executive Summary

Royal Mail plc, together with its subsidiaries, operates as a universal postal service provider in Europe, North America, Western United States, and Canada.


Snowflake Analysis

Undervalued with adequate balance sheet and pays a dividend.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-6.9%

RMG

3.3%

GB Logistics

-2.2%

GB Market


1 Year Return

-51.2%

RMG

-13.9%

GB Logistics

-25.9%

GB Market

Return vs Industry: RMG underperformed the UK Logistics industry which returned -13.8% over the past year.

Return vs Market: RMG underperformed the UK Market which returned -25.2% over the past year.


Shareholder returns

RMGIndustryMarket
7 Day-6.9%3.3%-2.2%
30 Day-24.9%-11.4%-21.7%
90 Day-45.1%-24.2%-29.6%
1 Year-45.3%-51.2%-11.2%-13.9%-22.2%-25.9%
3 Year-62.3%-70.1%-3.0%-12.0%-16.1%-26.6%
5 Year-62.0%-72.4%4.8%-10.8%-4.6%-26.2%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Royal Mail 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: RMG (£1.24) is trading below our estimate of fair value (£5.78)

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


Price To Earnings Ratio

PE vs Industry: RMG is good value based on its PE Ratio (3.8x) compared to the Logistics industry average (12.3x).

PE vs Market: RMG is good value based on its PE Ratio (3.8x) compared to the UK market (12.4x).


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: RMG is good value based on its PB Ratio (0.3x) compared to the XE Logistics industry average (1.9x).


Next Steps

Future Growth

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

-11.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RMG's earnings are forecast to decline over the next 3 years (-11.2% per year).

Earnings vs Market: RMG's earnings are forecast to decline over the next 3 years (-11.2% per year).

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

Revenue vs Market: RMG's revenue (1.3% per year) is forecast to grow slower than the UK market (2.4% per year).

High Growth Revenue: RMG's revenue (1.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RMG's Return on Equity is forecast to be low in 3 years time (2.8%).


Next Steps

Past Performance

How has Royal Mail performed over the past 5 years?

-3.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RMG has a large one-off loss of £106.0M impacting its September 29 2019 financial results.

Growing Profit Margin: RMG's current net profit margins (3%) are higher than last year (0.9%).


Past Earnings Growth Analysis

Earnings Trend: RMG's earnings have declined by -3.7% per year over the past 5 years.

Accelerating Growth: RMG's earnings growth over the past year (231.5%) exceeds its 5-year average (-3.7% per year).

Earnings vs Industry: RMG earnings growth over the past year (231.5%) exceeded the Logistics industry 14.4%.


Return on Equity

High ROE: RMG's Return on Equity (6.5%) is considered low.


Next Steps

Financial Health

How is Royal Mail's financial position?


Financial Position Analysis

Short Term Liabilities: RMG's short term assets (£1.6B) do not cover its short term liabilities (£2.0B).

Long Term Liabilities: RMG's short term assets (£1.6B) do not cover its long term liabilities (£1.8B).


Debt to Equity History and Analysis

Debt Level: RMG's debt to equity ratio (9%) is considered satisfactory.

Reducing Debt: RMG's debt to equity ratio has reduced from 22.9% to 9% over the past 5 years.

Debt Coverage: RMG's debt is well covered by operating cash flow (165.7%).

Interest Coverage: RMG's interest payments on its debt are well covered by EBIT (23.3x coverage).


Balance Sheet

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

Debt Coverage by Assets: RMG's debt is covered by short term assets (assets are 3.5x debt).


Next Steps

Dividend

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

20.11%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: RMG's dividend (20.11%) is higher than the bottom 25% of dividend payers in the UK market (2.68%).

High Dividend: RMG's dividend (20.11%) is in the top 25% of dividend payers in the UK market (7.57%)


Stability and Growth of Payments

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

Growing Dividend: RMG's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: At its current payout ratio (75.8%), RMG's payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RMG's dividends in 3 years are forecast to be covered by earnings (55% payout ratio).


Next Steps

Management

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

1.8yrs

Average management tenure


CEO

Rico Back

1.83s

Tenure

UK£753,600

Compensation

Mr. Rico Back has been Group CEO and Director of Royal Mail Group Ltd since June 1, 2018. He serves as the Chief Executive Officer, President and Managing Editor at General Logistics Systems France SAS. Mr ...


CEO Compensation Analysis

Compensation vs Market: Rico's total compensation ($USD922.72K) is below average for companies of similar size in the UK market ($USD1.87M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Rico Back
Group CEO & Director1.83yrsUK£753.60k0.17% £2.1m
Stuart Simpson
Chief Finance & Operating Officer and Director2.75yrsUK£544.00k0.0034% £41.6k
Shane O'Riordain
MD of Corporate Affairs1.83yrsno data0.0063% £78.8k
Mark Amsden
Group General Counsel1yrno datano data
Mel Tomlin
Chief of Staff & Member of Executive Board1.83yrsno datano data
Sally Ashford
Chief HR Officer & Member of Executive Board1.83yrsno datano data
Christian Herrlich
Group Chief Information Officer & Member of the Executive Board1.67yrsno datano data
Achim Dünnwald
Chief Strategy & Transformation Officer and Member of the Executive Board1.08yrsno datano data
James Rietkerk
Member of the Executive Board1.83yrsno datano data
Catherine Nash
Director of Investor Relationsno datano datano data

1.8yrs

Average Tenure

Experienced Management: RMG's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Rico Back
Group CEO & Director1.83yrsUK£753.60k0.17% £2.1m
Stuart Simpson
Chief Finance & Operating Officer and Director2.75yrsUK£544.00k0.0034% £41.6k
Michael Findlay
Non-Executive Director0.92yrno datano data
Sarah Elizabeth Hogg
Senior Independent Non-Executive Director0.50yrno datano data
Lynne Peacock
Non-Executive Director0.42yrno datano data
Keith Williams
Non-Executive Chairman0.92yrUK£66.00k0.0050% £62.2k
Maria da Cunha da Silva
Non-Executive Director0.92yrno datano data
Simon Thompson
Non-Executive Director2.42yrsUK£63.00kno data
Rita Griffin
Non-Executive Director3.33yrsUK£66.00k0.0020% £24.9k

0.9yrs

Average Tenure

63yo

Average Age

Experienced Board: RMG's board of directors are not considered experienced ( 0.9 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: RMG insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

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


Key Information

  • Name: Royal Mail plc
  • Ticker: RMG
  • Exchange: LSE
  • Founded: 2013
  • Industry: Air Freight and Logistics
  • Sector: Transportation
  • Market Cap: UK£1.243b
  • Shares outstanding: 1.00b
  • Website: https://www.royalmailgroup.com

Number of Employees


Location

  • Royal Mail plc
  • 100 Victoria Embankment
  • London
  • Greater London
  • EC4Y 0HQ
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RMGLSE (London Stock Exchange)YesOrdinary SharesGBGBPOct 2013
RYEDB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 2013
ROYM.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDOct 2013
RMGLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPOct 2013
ROYM.YOTCPK (Pink Sheets LLC)ADR EACH REPR 2 ORD GBP0.01USUSDDec 2013

Biography

Royal Mail plc, together with its subsidiaries, operates as a universal postal service provider in Europe, North America, Western United States, and Canada. It offers parcels and letter delivery services under the Royal Mail and Parcelforce Worldwide brands. The company also provides services for the collection, sorting, and delivery of parcels and letters; and catering and marketing mail services. In addition, it operates ground-based parcel delivery networks in Europe comprising the GLS network that covers 41 European countries and nation states through wholly-owned and partner companies. Further, the company provides express parcel delivery and logistics services. Additionally, it engages in property holdings activities; and provision of facilities management services. The company serves consumers, sole-traders, small and medium-sized enterprises, large businesses, retailers, and other postal operators, as well as B2B and B2C sectors. Royal Mail plc was incorporated in 2013 and is headquartered 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 Analysis2020/04/04 00:59
End of Day Share Price2020/04/03 00:00
Earnings2019/09/29
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.