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

8.0%

RMG

2.6%

GB Logistics

2.0%

GB Market


1 Year Return

-36.0%

RMG

4.6%

GB Logistics

3.3%

GB Market

Return vs Industry: RMG underperformed the UK Logistics industry which returned 4.6% over the past year.

Return vs Market: RMG underperformed the UK Market which returned 3.3% over the past year.


Share holder returns

RMGIndustryMarket
7 Day8.0%2.6%2.0%
30 Day-3.3%-3.3%-1.0%
90 Day0.05%-0.9%-1.7%
1 Year-28.9%-36.0%7.8%4.6%8.3%3.3%
3 Year-45.8%-56.1%24.0%13.1%19.0%4.5%
5 Year-31.8%-49.5%53.6%32.6%38.4%8.4%

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

Undervalued: RMG (£2.18) is trading below our estimate of fair value (£7.67)

Significantly Undervalued: RMG is trading below fair value by more than 20%.


Price Based on Earnings

PE vs Industry: RMG is good value based on its PE Ratio (12.5x) compared to the Logistics industry average (15.3x).

PE vs Market: RMG is good value based on its PE Ratio (12.5x) compared to the UK market (16.4x).


Price Based on Expected Growth

Low PEG Ratio: RMG is good value based on its PEG Ratio (0.8x)


Price Based on Value of Assets

PB vs Industry: RMG is good value based on its PB Ratio (0.5x) compared to the XE Logistics industry average (2.4x).


Next Steps

Future Growth

How is Royal Mail expected to perform in the next 1 to 3 years based on estimates from 11 analysts?

15.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Earnings vs Savings Rate: RMG's forecast earnings growth (15.4% per year) is above the savings rate (1.2%).

Earnings vs Market: RMG's earnings (15.4% per year) are forecast to grow faster than the UK market (12.3% per year).

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

Revenue vs Market: RMG's revenue (2.2% per year) is forecast to grow slower than the UK market (4% per year).

High Growth Revenue: RMG's revenue (2.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Estimates


Future Return on Equity

High Future ROE: RMG's Return on Equity is forecast to be low in 3 years time (6.6%).


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

Earnings Trend: RMG's earnings have declined by -33.7% per year over the past 5 years.

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

Earnings vs Industry: RMG had negative earnings growth (-31%) over the past year, making it difficult to compare to the Logistics industry average (11.2%).


Return on Equity

High ROE: RMG's Return on Equity (3.8%) is considered low.


Return on Assets

ROA vs Industry: RMG's Return on Assets is below or equal to the Logistics industry average last year.


Return on Capital Employed

ROCE Improving: RMG's Return on Capital Employed has declined over the past 3 years.


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) exceeds its long term liabilities (793.0M)


Debt to Equity History and Analysis

Debt Level: RMG's debt to equity ratio (9.3%) is considered satisfactory

Reducing Debt: RMG's debt to equity ratio has reduced from 25% to 9.3% over the past 5 years.

Debt Coverage: RMG's debt is well covered by operating cash flow (114.4%).

Interest Coverage: RMG's interest payments on its debt are well covered by EBIT (49.5x 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 3.767980x debt).


Next Steps

Dividend

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

7.21%

Expected Dividend Yield


Dividend Yield vs Market

company11.5%marketbottom25%2.0%markettop25%5.4%industryaverage3.7%forecastin3Years7.2%

Current dividend yield vs market & industry


Dividend Yield and Payments Analysis

Notable Dividend: RMG's dividend (11.46%) is higher than the bottom 25% of dividend payers in the UK market (2%).

High Dividend: RMG's dividend (11.46%) is in the top 25% of dividend payers in the UK market (5.42%)

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 5 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (142.9%), RMG's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RMG's dividends in 3 years are forecast to be covered by earnings (53.9% payout ratio).


Next Steps

Management

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

1.3yrs

Average management tenure


CEO

Rico Back 0

1.3yrs

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

Compensation vs. Market: Rico has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the UK market.

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


Management Age and Tenure

1.3yrs

Average Tenure

Experienced Management: RMG's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Age and Tenure

1.3yrs

Average Tenure

63yo

Average Age

Experienced Board: RMG's board of directors are not considered experienced ( 1.3 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold 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: 1.3yrs
  • James Rietkerk

    Member of the Executive Board

    • Tenure: 1.3yrs
  • Rico Back

    Group CEO & Director

    • Tenure: 1.3yrs
    • Compensation: UK£753.60k
  • Mark Amsden

    Group General Counsel

    • Tenure: 0.5yrs
  • Stuart Simpson

    Chief Finance & Operating Officer and Director

    • Tenure: 2.3yrs
    • Compensation: UK£544.00k
  • Sally Ashford (49yo)

    Chief HR Officer & Member of Executive Board

    • Tenure: 1.3yrs
  • Catherine Nash

    Director of Investor Relations

    • Tenure: 0yrs
  • Mel Tomlin

    Chief of Staff & Member of Executive Board

    • Tenure: 1.3yrs
  • Christian Herrlich

    Group Chief Information Officer & Member of the Executive Board

    • Tenure: 1.2yrs
  • Achim Dünnwald

    Chief Strategy & Transformation Officer and Member of the Executive Board

    • Tenure: 0.6yrs

Board Members

  • Michael Findlay (51yo)

    Non-Executive Director

    • Tenure: 0.4yrs
  • Sarah Elizabeth Hogg (73yo)

    Senior Independent Non-Executive Director

    • Tenure: 0yrs
  • Keith Williams (63yo)

    Non-Executive Chairman

    • Tenure: 0.4yrs
    • Compensation: UK£66.00k
  • Maria da Cunha

    Non-Executive Director

    • Tenure: 0.4yrs
  • Rico Back

    Group CEO & Director

    • Tenure: 1.3yrs
    • Compensation: UK£753.60k
  • Simon Thompson

    Non-Executive Director

    • Tenure: 1.9yrs
    • Compensation: UK£63.00k
  • Stuart Simpson

    Chief Finance & Operating Officer and Director

    • Tenure: 2.3yrs
    • Compensation: UK£544.00k
  • Rita Griffin

    Non-Executive Director

    • Tenure: 2.8yrs
    • 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£2.181b
  • 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)ADRUSUSDDec 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 Analysis2019/10/12 22:29
End of Day Share Price2019/10/11 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.

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