LSE:DRX

Stock Analysis Report

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Executive Summary

Drax Group plc, together with its subsidiaries, engages in the generation and supply of electricity in the United Kingdom.


Snowflake Analysis

Average dividend payer and fair value.


Similar Companies

Share Price & News

How has Drax Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

5.0%

DRX

4.7%

GB Renewable Energy

2.0%

GB Market


1 Year Return

-28.6%

DRX

-17.3%

GB Renewable Energy

-12.8%

GB Market

Return vs Industry: DRX underperformed the UK Renewable Energy industry which returned -17.4% over the past year.

Return vs Market: DRX underperformed the UK Market which returned -12.5% over the past year.


Shareholder returns

DRXIndustryMarket
7 Day5.0%4.7%2.0%
30 Day4.5%9.5%5.7%
90 Day-19.3%-7.4%-8.2%
1 Year-23.9%-28.6%-12.6%-17.3%-8.6%-12.8%
3 Year-29.7%-39.1%-37.2%-44.5%-6.2%-17.6%
5 Year-33.4%-44.0%82.3%60.6%12.7%-12.5%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Drax Group 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: DRX (£2.1) is trading below our estimate of fair value (£7.67)

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


Price To Earnings Ratio

PE vs Industry: DRX is poor value based on its PE Ratio (1664.6x) compared to the Renewable Energy industry average (28.2x).

PE vs Market: DRX is poor value based on its PE Ratio (1664.6x) compared to the UK market (14.7x).


Price to Earnings Growth Ratio

PEG Ratio: DRX is poor value based on its PEG Ratio (57.7x)


Price to Book Ratio

PB vs Industry: DRX is good value based on its PB Ratio (0.5x) compared to the GB Renewable Energy industry average (0.9x).


Next Steps

Future Growth

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

28.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DRX's forecast earnings growth (28.9% per year) is above the savings rate (1.2%).

Earnings vs Market: DRX's earnings (28.9% per year) are forecast to grow faster than the UK market (20.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: DRX's revenue (1% per year) is forecast to grow slower than the UK market (3.6% per year).

High Growth Revenue: DRX's revenue (1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DRX's Return on Equity is forecast to be low in 3 years time (8.1%).


Next Steps

Past Performance

How has Drax Group performed over the past 5 years?

-44.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DRX has a large one-off loss of £15.7M impacting its December 31 2019 financial results.

Growing Profit Margin: DRX's current net profit margins (0.01%) are lower than last year (0.5%).


Past Earnings Growth Analysis

Earnings Trend: DRX's earnings have declined by -44.2% per year over the past 5 years.

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

Earnings vs Industry: DRX had negative earnings growth (-97.5%) over the past year, making it difficult to compare to the Renewable Energy industry average (25.4%).


Return on Equity

High ROE: DRX's Return on Equity (0.03%) is considered low.


Next Steps

Financial Health

How is Drax Group's financial position?


Financial Position Analysis

Short Term Liabilities: DRX's short term assets (£1.7B) exceed its short term liabilities (£1.3B).

Long Term Liabilities: DRX's short term assets (£1.7B) do not cover its long term liabilities (£1.7B).


Debt to Equity History and Analysis

Debt Level: DRX's debt to equity ratio (72.6%) is considered high.

Reducing Debt: DRX's debt to equity ratio has increased from 20.3% to 72.6% over the past 5 years.

Debt Coverage: DRX's debt is well covered by operating cash flow (33.2%).

Interest Coverage: DRX's interest payments on its debt are not well covered by EBIT (1.4x coverage).


Balance Sheet


Next Steps

Dividend

What is Drax Group's current dividend yield, its reliability and sustainability?

7.56%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: DRX's dividend (7.56%) is higher than the bottom 25% of dividend payers in the UK market (2.03%).

High Dividend: DRX's dividend (7.56%) is in the top 25% of dividend payers in the UK market (5.68%)


Stability and Growth of Payments

Stable Dividend: DRX's dividend payments have been volatile in the past 10 years.

Growing Dividend: DRX's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (12579.1%), DRX's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: DRX's dividends in 3 years are forecast to be covered by earnings (55.9% payout ratio).


Next Steps

Management

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

1.8yrs

Average management tenure


CEO

Will Gardiner (54yo)

2.33yrs

Tenure

UK£1,164,000

Compensation

Mr. Dwight Daniel Willard Gardiner, known as Will, has been Group Chief Executive Officer of Drax Group plc since January 1, 2018. Mr. Gardiner has been Executive Director of Drax Group plc since November  ...


CEO Compensation Analysis

Compensation vs Market: Will's total compensation ($USD1.44M) is about average for companies of similar size in the UK market ($USD1.18M).

Compensation vs Earnings: Will's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Dwight Daniel Gardiner
Group CEO & Executive Director2.33yrsUK£1.16m0.10% £867.6k
Andy Skelton
CFO & Director1.33yrsUK£660.07k0.021% £172.7k
Mark Strafford
Head of Investor Relationsno datano datano data
Samantha Brook
Head of Corporate HR3.75yrsno datano data
Gary Williams
Head of Outage & Services Sectionno datano datano data
Rebecca Heaton
Group Head of Climate Change5.17yrsno datano data
Penny Small
Chief Transformation Officer2.33yrsno datano data
Jason Shipstone
Executive Vice President of Innovation1.33yrsno data0.014% £117.2k
Paul Sheffield
Managing Director of Customers0.75yrno data0.0040% £33.1k
Esa Heiskanen
Chief Officer Capital Projects0.58yrno datano data

1.8yrs

Average Tenure

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


Board Members

NamePositionTenureCompensationOwnership
Dwight Daniel Gardiner
Group CEO & Executive Director2.33yrsUK£1.16m0.10% £867.6k
Andy Skelton
CFO & Director1.33yrsUK£660.07k0.021% £172.7k
Philip Cox
Chairman of the Board5yrsUK£250.00k0.015% £126.2k
David Nussbaum
Senior Independent Director1yrUK£62.00kno data
John Baxter
Non-Executive Independent Director1yrUK£39.00k0.0025% £21.0k
Vanessa Simms
Independent Non-Executive Director1.83yrsUK£62.00kno data
Nicola Hodson
Independent Non-Executive Director2.33yrsUK£62.00kno data

1.8yrs

Average Tenure

53.5yo

Average Age

Experienced Board: DRX's board of directors are not considered experienced ( 1.8 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: DRX 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

Drax Group plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Drax Group plc
  • Ticker: DRX
  • Exchange: LSE
  • Founded: 2005
  • Industry: Independent Power Producers and Energy Traders
  • Sector: Utilities
  • Market Cap: UK£834.960m
  • Shares outstanding: 396.84m
  • Website: https://www.drax.com

Number of Employees


Location

  • Drax Group plc
  • Drax Power Station
  • Selby
  • North Yorkshire
  • YO8 8PH
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DRXLSE (London Stock Exchange)YesOrdinary SharesGBGBPDec 2005
D9F2DB (Deutsche Boerse AG)YesOrdinary SharesDEEURDec 2005
DRXG.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDDec 2005
DRXLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPDec 2005
DRXG.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDMay 2011

Biography

Drax Group plc, together with its subsidiaries, engages in the generation and supply of electricity in the United Kingdom. The company operates through three segments: Generation, Customers, and, Pellet Production. It produces low carbon and renewable electricity; and provides system support services to the electricity grid. The company owns and operates Drax Power Station that produces electricity from biomass and coal with an installed capacity of 3,906 megawatts (MW) located in Selby, North Yorkshire; Cruachan Power Station, a pumped hydro storage station, with an installed capacity of 440 MW located in Argyll and Bute, western Scotland; and Lanark and Galloway hydro-electric power stations with an installed capacity of 126 MW located in southwest Scotland. It also owns and operates combined cycle gas turbine power stations, including Damhead Creek power station with an installed capacity of 805 MW; Rye House power station with an installed capacity of 715 MW; Shoreham power station with an installed capacity of 420 MW; and Blackburn power station with an installed capacity of 60 MW located in England. In addition, the company owns and operates Daldowie fuel plant that processes sludge from a wastewater treatment plant and converts it into dry and low-odour fuel pellets. Further, it manufactures and sells compressed wood pellets for use in electricity production; supplies and manages electricity and gas for large industrial and commercial sector customers, as well as small businesses; and provides debt recovery services. Drax Group plc was incorporated in 2005 and is based in Selby, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/05/31 22:00
End of Day Share Price2020/05/29 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.