LSE:DRX

Stock Analysis Report

Executive Summary

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

Snowflake

Fundamentals

Reasonable growth potential 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


Market Performance


7 Day Return

3.7%

DRX

0.3%

GB Renewable Energy

-0.4%

GB Market


1 Year Return

-25.9%

DRX

-17.9%

GB Renewable Energy

2.9%

GB Market

Return vs Industry: DRX underperformed the UK Renewable Energy industry which returned -17.9% over the past year.

Return vs Market: DRX underperformed the UK Market which returned 2.9% over the past year.


Shareholder returns

DRXIndustryMarket
7 Day3.7%0.3%-0.4%
30 Day6.4%1.7%-1.4%
90 Day8.6%5.2%-2.1%
1 Year-22.4%-25.9%-13.7%-17.9%7.9%2.9%
3 Year2.9%-7.1%-12.5%-19.5%18.0%3.6%
5 Year-40.1%-48.4%-40.3%-48.2%35.8%6.4%

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

Undervalued: DRX (£3.04) is trading below our estimate of fair value (£12.48)

Significantly Undervalued: 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 (42.9x) compared to the Renewable Energy industry average (22.5x).

PE vs Market: DRX is poor value based on its PE Ratio (42.9x) compared to the UK market (16.7x).


Price to Earnings Growth Ratio

Low PEG Ratio: DRX is poor value based on its PEG Ratio (2.1x)


Price to Book Ratio

PB vs Industry: DRX is good value based on its PB Ratio (0.6x) compared to the GB Renewable Energy industry average (1.1x).


Next Steps

Future Growth

How is Drax Group forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

20.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DRX's forecast earnings growth (20.3% per year) is above the savings rate (1.2%).

Earnings vs Market: DRX's earnings (20.3% per year) are forecast to grow faster than the UK market (12.6% per year).

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

Revenue vs Market: DRX's revenue (4.8% per year) is forecast to grow faster than the UK market (3.9% per year).

High Growth Revenue: DRX's revenue (4.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

High Future ROE: DRX's Return on Equity is forecast to be low in 3 years time (7%).


Next Steps

Past Performance

How has Drax Group performed over the past 5 years?

-27.6%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: DRX has become profitable over the past 5 years, growing earnings by -27.6% per year.

Accelerating Growth: DRX has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: DRX has become profitable in the last year, making it difficult to compare its past year earnings growth to the Renewable Energy industry (12.4%).


Return on Equity

High ROE: DRX's Return on Equity (1.5%) is considered low.


Return on Assets

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


Return on Capital Employed

ROCE Improving: DRX has significantly improved its Return on Capital Employed over the past 3 years.


Next Steps

Financial Health

How is Drax Group's financial position?


Financial Position Analysis

Short Term Liabilities: DRX's short term assets (£1.5B) exceeds its short term liabilities (£1.2B)

Long Term Liabilities: DRX's short term assets (1.5B) do not cover its long term liabilities (1.6B)


Debt to Equity History and Analysis

Debt Level: DRX's debt to equity ratio (62.9%) is considered high

Reducing Debt: DRX's debt to equity ratio has increased from 22.2% to 62.9% over the past 5 years.

Debt Coverage: DRX's debt is well covered by operating cash flow (33.9%).

Interest Coverage: DRX's interest payments on its debt are not well covered by EBIT (2.5x coverage).


Balance Sheet

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

Debt Coverage by Assets: DRX's debt is covered by short term assets (assets are 1.285440x debt).


Next Steps

Dividend

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

4.64%

Current Dividend Yield


Dividend Yield vs Market

company4.6%marketbottom25%2.0%markettop25%5.4%industryaverage3.2%forecastin3Years6.2%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: DRX's dividend (4.64%) is higher than the bottom 25% of dividend payers in the UK market (2.01%).

High Dividend: DRX's dividend (4.64%) is low compared to the top 25% of dividend payers in the UK market (5.36%).

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

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


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (210.1%), 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 (52.3% payout ratio).


Next Steps

Management

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

1.8yrs

Average management tenure


CEO

Will Gardiner (54yo)

1.8yrs

Tenure

UK£1,912,000

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

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


Management Age and Tenure

1.8yrs

Average Tenure

48yo

Average Age

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


Board Age and Tenure

1.5yrs

Average Tenure

53yo

Average Age

Experienced Board: DRX's board of directors are not considered experienced ( 1.5 years average tenure), which suggests a new board.


Insider Trading

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


Recent Insider Transactions

BuyUK£48,37826 Jul 19
Andy Skelton
EntityIndividual
Role
Member of the Board of Directors
CFO & Director
Shares16,250
Max PriceUK£2.98
BuyUK£18,83027 Jun 19
John Baxter
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares7,000
Max PriceUK£2.69
BuyUK£49,69708 May 19
Andy Skelton
EntityIndividual
Role
Member of the Board of Directors
CFO & Director
Shares15,000
Max PriceUK£3.31
SellUK£67,06508 Mar 19
Andrew Koss
EntityIndividual
Role
Member of the Board of Directors
Executive Director & CEO of Generation
Shares17,966
Max PriceUK£3.73
SellUK£391,92608 Mar 19
Dwight Daniel Gardiner
EntityIndividual
Role
Chief Executive Officer
Group CEO & Executive Director
Shares104,993
Max PriceUK£3.73
BuyUK£199,99921 Dec 18
Dwight Daniel Gardiner
EntityIndividual
Role
Chief Executive Officer
Group CEO & Executive Director
Shares55,710
Max PriceUK£3.59

Ownership Breakdown


Management Team

  • Will Gardiner (54yo)

    Group CEO & Executive Director

    • Tenure: 1.8yrs
    • Compensation: UK£1.91m
  • Gary Williams

    Head of Outage & Services Section

    • Tenure: 0yrs
  • Samantha Brook

    Head of Corporate HR

    • Tenure: 3.2yrs
  • Andy Koss (48yo)

    Executive Director & CEO of Generation

    • Tenure: 3.8yrs
    • Compensation: UK£806.00k
  • Andy Skelton (47yo)

    CFO & Director

    • Tenure: 0.8yrs
  • Rebecca Heaton

    Head of Sustainability & Policy

    • Tenure: 4.6yrs
  • David McCallum

    General Counsel & Group Company Secretary

    • Tenure: 0yrs
  • Paul Sheffield

    Managing Director of Customers

    • Tenure: 0.2yrs
  • Penny Small

    Chief Transformation Officer

    • Tenure: 1.8yrs
  • Jason Shipstone

    Executive Vice President of Innovation

    • Tenure: 0.8yrs

Board Members

  • Phil Cox (67yo)

    Chairman of the Board

    • Tenure: 4.5yrs
    • Compensation: UK£250.00k
  • Will Gardiner (54yo)

    Group CEO & Executive Director

    • Tenure: 1.8yrs
    • Compensation: UK£1.91m
  • David Nussbaum (60yo)

    Senior Independent Director

    • Tenure: 0.5yrs
    • Compensation: UK£55.00k
  • John Baxter

    Independent Non-Executive Director

    • Tenure: 0.5yrs
  • Andy Koss (48yo)

    Executive Director & CEO of Generation

    • Tenure: 3.8yrs
    • Compensation: UK£806.00k
  • Andy Skelton (47yo)

    CFO & Director

    • Tenure: 0.8yrs
  • Vanessa Simms (43yo)

    Independent Non-Executive Director

    • Tenure: 1.3yrs
    • Compensation: UK£29.00k
  • Nicola Hodson (53yo)

    Independent Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: UK£53.00k

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£1.205b
  • Shares outstanding: 396.34m
  • 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. The company operates through three segments: Power Generation, Pellet Production, and B2B Energy Supply. ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/19 21:05
End of Day Share Price2019/10/18 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.