LSE:RMG

Stock Analysis Report

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Market Cap

UK£5.0b

Last Updated

2021/07/31 04:00 UTC

Data Sources

Company Financials +

Executive Summary

Royal Mail plc, together with its subsidiaries, operates as a universal postal service provider in Italy, France, Spain, Germany, North America, Croatia, the Czech Republic, Hungary, Poland, Romania, Slovakia, Slovenia, Austria, Belgium, Denmark, Ireland, the Netherlands, and Portugal. More Details


Snowflake Analysis

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

Stable Share Price: RMG is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: RMG's weekly volatility (4%) has been stable over the past year.


Market Performance


7 Day Return

-5.4%

RMG

-2.8%

GB Logistics

0.3%

GB Market


1 Year Return

213.4%

RMG

74.6%

GB Logistics

22.4%

GB Market

Return vs Industry: RMG exceeded the UK Logistics industry which returned 74.6% over the past year.

Return vs Market: RMG exceeded the UK Market which returned 22.4% over the past year.


Shareholder returns

RMGIndustryMarket
7 Day-5.4%-2.8%0.3%
30 Day-12.8%0.5%0.3%
90 Day1.7%13.0%1.5%
1 Year219.5%213.4%80.7%74.6%27.9%22.4%
3 Year27.7%9.0%106.9%90.8%12.7%-0.1%
5 Year28.0%-1.7%148.5%113.4%39.4%12.6%

Long-Term 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?

35.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RMG (£5.04) is trading below our estimate of fair value (£7.78)

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 (8.1x) compared to the European Logistics industry average (24.1x).

PE vs Market: RMG is good value based on its PE Ratio (8.1x) compared to the UK market (23.6x).


Price to Earnings Growth Ratio

PEG Ratio: RMG is poor value based on its PEG Ratio (14.5x)


Price to Book Ratio

PB vs Industry: RMG is good value based on its PB Ratio (1x) compared to the XE Logistics industry average (3.9x).


Future Growth

How is Royal Mail forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

0.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RMG's forecast earnings growth (0.6% per year) is below the savings rate (0.9%).

Earnings vs Market: RMG's earnings (0.6% per year) are forecast to grow slower than the UK market (14.8% per year).

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

Revenue vs Market: RMG's revenue (2.4% per year) is forecast to grow slower than the UK market (4.7% per year).

High Growth Revenue: RMG's revenue (2.4% 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 (11.8%).


Past Performance

How has Royal Mail performed over the past 5 years?

1.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RMG has a large one-off loss of £186.0M impacting its March 28 2021 financial results.

Growing Profit Margin: RMG's current net profit margins (4.9%) are higher than last year (1.5%).


Past Earnings Growth Analysis

Earnings Trend: RMG's earnings have grown by 1.9% per year over the past 5 years.

Accelerating Growth: RMG's earnings growth over the past year (283%) exceeds its 5-year average (1.9% per year).

Earnings vs Industry: RMG earnings growth over the past year (283%) exceeded the Logistics industry 24.5%.


Return on Equity

High ROE: RMG's Return on Equity (12.9%) is considered low.


Financial Health

How is Royal Mail's financial position?


Financial Position Analysis

Short Term Liabilities: RMG's short term assets (£3.3B) exceed its short term liabilities (£2.7B).

Long Term Liabilities: RMG's short term assets (£3.3B) exceed its long term liabilities (£2.5B).


Debt to Equity History and Analysis

Debt Level: RMG's debt to equity ratio (18.6%) is considered satisfactory.

Reducing Debt: RMG's debt to equity ratio has increased from 8.8% to 18.6% over the past 5 years.

Debt Coverage: RMG's debt is well covered by operating cash flow (131.1%).

Interest Coverage: RMG's interest payments on its debt are well covered by EBIT (25.7x coverage).


Balance Sheet


Dividend

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

1.98%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: RMG's dividend (1.98%) is higher than the bottom 25% of dividend payers in the UK market (1.31%).

High Dividend: RMG's dividend (1.98%) is low compared to the top 25% of dividend payers in the UK market (4%).


Stability and Growth of Payments

Stable Dividend: RMG has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: RMG has only been paying a dividend for 7 years, and since then payments have fallen.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (16.1%), RMG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RMG's dividends in 3 years are forecast to be well covered by earnings (42.6% payout ratio).


Next Steps

Management

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

3.0yrs

Average management tenure


CEO

Simon Thompson

0.50

Tenure

UK£186,000

Compensation

Mr. Simon Thompson serves as Chief Executive Officer at Royal Mail plc since January 11, 2021. He has been a Non Executive Director of Royal Mail plc since November 1, 2017 and serves as Chief Executive of...


CEO Compensation Analysis

Compensation vs Market: Simon's total compensation ($USD258.65K) is below average for companies of similar size in the UK market ($USD2.23M).

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


Leadership Team

Experienced Management: RMG's management team is considered experienced (3 years average tenure).


Board Members

Experienced Board: RMG's board of directors are not considered experienced ( 2.2 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: Insufficient data to determine if 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£5.039b
  • Shares outstanding: 999.43m
  • Website: https://www.royalmailgroup.com

Number of Employees


Location

  • Royal Mail plc
  • 185 Farringdon Road
  • London
  • Greater London
  • EC1A 1AA
  • United Kingdom

Listings


Biography

Royal Mail plc, together with its subsidiaries, operates as a universal postal service provider in Italy, France, Spain, Germany, North America, Croatia, the Czech Republic, Hungary, Poland, Romania, Slova...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/07/31 04:00
End of Day Share Price2021/07/30 00:00
Earnings2021/03/28
Annual Earnings2021/03/28


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.