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

Fundamentals

Very undervalued with excellent balance sheet.


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


Market Performance


7 Day Return

-2.4%

LSE:RMG

0.9%

GB Logistics

-0.3%

GB Market


1 Year Return

-57.4%

LSE:RMG

-9.9%

GB Logistics

-5.3%

GB Market

RMG underperformed the Logistics industry which returned -9.7% over the past year.

RMG underperformed the Market in United Kingdom of Great Britain and Northern Ireland which returned -5.7% over the past year.


Share holder returns

RMGIndustryMarket
7 Day-2.4%0.9%-0.3%
30 Day-9.8%-2.2%-3.9%
90 Day-5.5%-0.3%-2.2%
1 Year-52.7%-57.4%-6.4%-9.9%-0.9%-5.3%
3 Year-52.1%-61.2%7.7%-2.8%18.9%5.1%
5 Year-40.1%-55.6%14.4%-1.6%28.1%1.1%

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 based on future cash flows and its price relative to the stock market?

>50%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Royal Mail's share price is below the future cash flow value, and at a moderate discount (> 20%).

Royal Mail's share price is below the future cash flow value, and at a substantial discount (> 40%).


Price Based on Earnings

Royal Mail is good value based on earnings compared to the Europe Logistics industry average.

Royal Mail is good value based on earnings compared to the United Kingdom of Great Britain and Northern Ireland market.


Price Based on Expected Growth

Royal Mail is good value based on expected growth next year.


Price Based on Value of Assets

Royal Mail is good value based on assets compared to the Europe Logistics industry average.


Next Steps

Future Growth

How is Royal Mail expected to perform in the next 1 to 3 years based on estimates from 12 analysts?

13.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Royal Mail's revenue is expected to grow by 2.1% yearly, however this is not considered high growth (20% yearly).

Royal Mail's earnings are expected to grow by 13% yearly, however this is not considered high growth (20% yearly).

Royal Mail's revenue growth is positive but not above the United Kingdom of Great Britain and Northern Ireland market average.

Royal Mail's earnings growth is expected to exceed the United Kingdom of Great Britain and Northern Ireland market average.

Royal Mail's earnings growth is expected to exceed the low risk savings rate of 1.2%.


Earnings per Share Growth Estimates


Future Return on Equity

Royal Mail is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).


Next Steps

Past Performance

How has Royal Mail performed over the past 5 years?

-33.7%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Royal Mail's year on year earnings growth rate was negative over the past 5 years and the most recent earnings are below average.

Royal Mail's 1-year earnings growth is negative, it can't be compared to the 5-year average.

Royal Mail's 1-year earnings growth is negative, it can't be compared to the Europe Logistics industry average.


Return on Equity

Royal Mail has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).


Return on Assets

Royal Mail used its assets less efficiently than the Europe Logistics industry average last year based on Return on Assets.


Return on Capital Employed

Royal Mail's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is Royal Mail's financial position?


Financial Position Analysis

Royal Mail's short term (1 year) commitments are greater than its holdings of cash and other short term assets.

Royal Mail's cash and other short term assets cover its long term commitments.


Debt to Equity History and Analysis

Royal Mail's level of debt (9.3%) compared to net worth is satisfactory (less than 40%).

The level of debt compared to net worth has been reduced over the past 5 years (25% vs 9.3% today).

Debt is well covered by operating cash flow (114.4%, greater than 20% of total debt).

Interest payments on debt are well covered by earnings (EBIT is 49.5x coverage).


Balance Sheet

High level of physical assets or inventory.

Debt is covered by short term assets, assets are 3.8x debt.


Next Steps

Dividend

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

8.04%

Expected Dividend Yield


Dividend Yield and Payments Analysis

Royal Mail's pays a higher dividend yield than the bottom 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (2.08%).

Royal Mail's dividend is above the markets top 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (5.77%).

Whilst dividend payments have been stable, Royal Mail has been paying a dividend for less than 10 years.

Dividend payments have increased, but Royal Mail only paid a dividend in the past 5 years.


Current Payout to Shareholders

Dividends paid are not well covered by earnings (0.7x coverage).


Future Payout to Shareholders

Dividends after 3 years are expected to be covered by earnings (1.8x coverage).


Next Steps

Management

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

1.2yrs

Average management tenure


CEO

Rico Back 0

1.2yrs

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 S.A. Mr ...


CEO Compensation Analysis

Rico's remuneration is lower than average for companies of similar size in United Kingdom of Great Britain and Northern Ireland.

Insufficient data for Rico to compare compensation growth.


Management Age and Tenure

1.2yrs

Average Tenure

The average tenure for the Royal Mail management team is less than 2 years, this suggests a new team.


Board Age and Tenure

0.3yrs

Average Tenure

The average tenure for the Royal Mail board of directors is less than 3 years, this suggests a new board.


Insider Trading

More shares have been bought than sold by Royal Mail individual insiders in the past 3 months.


Recent Insider Transactions

BuyUK£297,51705 Jun 19
Rico Back
EntityIndividual
Role
Chief Executive Officer
Group CEO & Director
Shares150,000
Max PriceUK£1.99
BuyUK£200,00023 May 19
Rico Back
EntityIndividual
Role
Chief Executive Officer
Group CEO & Director
Shares100,000
Max PriceUK£2.00
BuyUK£414,99423 May 19
Rico Back
EntityIndividual
Role
Chief Executive Officer
Group CEO & Director
Shares200,000
Max PriceUK£2.08
BuyUK£239,47005 Dec 18
Arthur Owen
EntityIndividual
Shares78,028
Max PriceUK£3.07

Ownership Breakdown


Management Team

  • Shane O'Riordain

    MD of Corporate Affairs

    • Tenure: 1.2yrs
  • James Rietkerk

    Member of the Executive Board

    • Tenure: 1.2yrs
  • Rico Back

    Group CEO & Director

    • Tenure: 1.2yrs
    • Compensation: UK£753.60k
  • Mark Amsden

    Group General Counsel

    • Tenure: 0.3yrs
  • Stuart Simpson

    Chief Finance & Operating Officer and Director

    • Tenure: 2.1yrs
    • Compensation: UK£544.00k
  • Sally Ashford (49yo)

    Chief HR Officer & Member of Executive Board

    • Tenure: 1.2yrs
  • Catherine Nash

    Director of Investor Relations

    • Tenure: 0.0yrs
  • Mel Tomlin

    Chief of Staff & Member of Executive Board

    • Tenure: 1.2yrs
  • Christian Herrlich

    Group Chief Information Officer & Member of the Executive Board

    • Tenure: 1.0yrs
  • Achim Dünnwald

    Chief Strategy & Transformation Officer and Member of the Executive Board

    • Tenure: 0.4yrs

Board Members

  • Michael Findlay (51yo)

    Non-Executive Director

    • Tenure: 0.3yrs
  • Keith Williams (63yo)

    Chairman

    • Tenure: 0.3yrs
    • Compensation: UK£66.00k
  • Maria da Cunha

    Non-Executive Director

    • Tenure: 0.3yrs
  • Rico Back

    Group CEO & Director

    • Tenure: 1.2yrs
    • Compensation: UK£753.60k
  • Simon Thompson

    Senior Independent Non-Executive Director

    • Tenure: 0.1yrs
    • Compensation: UK£63.00k
  • Stuart Simpson

    Chief Finance & Operating Officer and Director

    • Tenure: 2.1yrs
    • Compensation: UK£544.00k
  • Rita Griffin

    Non-Executive Director

    • Tenure: 2.7yrs
    • Compensation: UK£66.00k

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£1.980b
  • 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 u ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/08/19 21:43
End of Day Share Price2019/08/19 00:00
Earnings2019/03/31
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.