WSE:NWG

Stock Analysis Report

Executive Summary

Newag S.A. engages in the production and sale of rail vehicles in Poland.

Rewards

Trading at 46% below its fair value

Earnings are forecast to grow 4.11% per year

Earnings grew by 142.9% over the past year

Risk Analysis

Debt is not well covered by operating cash flow

High level of non-cash earnings

Unstable dividend track record



Snowflake Analysis

Solid track record and fair value.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: NWG has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.7%

NWG

-2.5%

PL Machinery

-3.6%

PL Market


1 Year Return

51.3%

NWG

-13.3%

PL Machinery

-9.0%

PL Market

Return vs Industry: NWG exceeded the Polish Machinery industry which returned -11.4% over the past year.

Return vs Market: NWG exceeded the Polish Market which returned -4.3% over the past year.


Shareholder returns

NWGIndustryMarket
7 Day-1.7%-2.5%-3.6%
30 Day7.5%6.7%-1.3%
90 Day24.3%1.9%-2.3%
1 Year57.9%51.3%-6.9%-13.3%-6.2%-9.0%
3 Year39.1%27.8%-18.6%-28.0%-0.9%-8.0%
5 Year15.8%-3.1%-3.6%-15.9%2.7%-10.0%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Newag undervalued compared to its fair value and its price relative to the market?

47.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NWG (PLN23.5) is trading below our estimate of fair value (PLN43.5)

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


Price To Earnings Ratio

PE vs Industry: NWG is poor value based on its PE Ratio (9.5x) compared to the Machinery industry average (8.5x).

PE vs Market: NWG is good value based on its PE Ratio (9.5x) compared to the Polish market (11.6x).


Price to Earnings Growth Ratio

PEG Ratio: NWG is poor value based on its PEG Ratio (2.3x)


Price to Book Ratio

PB vs Industry: NWG is overvalued based on its PB Ratio (2.1x) compared to the PL Machinery industry average (0.9x).


Next Steps

Future Growth

How is Newag forecast to perform in the next 1 to 3 years based on estimates from 2 analysts?

4.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NWG's forecast earnings growth (4.1% per year) is above the savings rate (2%).

Earnings vs Market: NWG's earnings (4.1% per year) are forecast to grow slower than the Polish market (10% per year).

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

Revenue vs Market: NWG's revenue (4.3% per year) is forecast to grow slower than the Polish market (5.1% per year).

High Growth Revenue: NWG's revenue (4.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NWG's Return on Equity is forecast to be low in 3 years time (14.5%).


Next Steps

Past Performance

How has Newag performed over the past 5 years?

5.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NWG has a high level of non-cash earnings.

Growing Profit Margin: NWG's current net profit margins (10.7%) are higher than last year (5.3%).


Past Earnings Growth Analysis

Earnings Trend: NWG's earnings have grown by 5.3% per year over the past 5 years.

Accelerating Growth: NWG's earnings growth over the past year (142.9%) exceeds its 5-year average (5.3% per year).

Earnings vs Industry: NWG earnings growth over the past year (142.9%) exceeded the Machinery industry 24.5%.


Return on Equity

High ROE: NWG's Return on Equity (22.4%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Newag's financial position?


Financial Position Analysis

Short Term Liabilities: NWG's short term assets (PLN836.3M) exceed its short term liabilities (PLN551.5M).

Long Term Liabilities: NWG's short term assets (PLN836.3M) exceed its long term liabilities (PLN335.2M).


Debt to Equity History and Analysis

Debt Level: NWG's debt to equity ratio (82%) is considered high.

Reducing Debt: NWG's debt to equity ratio has increased from 62.5% to 82% over the past 5 years.

Debt Coverage: NWG's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: NWG's interest payments on its debt are well covered by EBIT (16.1x coverage).


Balance Sheet

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

Debt Coverage by Assets: NWG's debt is covered by short term assets (assets are 2.1x debt).


Next Steps

Dividend

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

3.26%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%2.3%markettop25%6.9%industryaverage9.0%forecastin3Years3.2%

Current dividend yield vs market & industry

Notable Dividend: NWG's dividend (3.19%) is higher than the bottom 25% of dividend payers in the Polish market (2.4%).

High Dividend: NWG's dividend (3.19%) is low compared to the top 25% of dividend payers in the Polish market (7.05%).


Stability and Growth of Payments

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

Growing Dividend: NWG's dividend payments have increased, but the company has only paid a dividend for 6 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (30.3%), NWG's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: NWG's dividends in 3 years are forecast to be well covered by earnings (37.7% payout ratio).


Next Steps

Management

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

4.6yrs

Average management tenure


CEO

ZbiGniew KonieCzek 0

0yrs

Tenure

zł2,241,000

Compensation

Mr. ZbiGniew KonieCzek has been the President of the Board at Newag Spólka Akcyjna (Former Name: Newag S.A.) since 2001 and serves as its Chief Executive Officer, President. Mr. KonieCzek serves as a Membe ...


Management Age and Tenure

4.6yrs

Average Tenure

Experienced Management: NWG's management team is considered experienced (4.6 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Katarzyna Szwarc

    Secretary of the Supervisory Board

    • Tenure: 4.6yrs
    • Compensation: zł62.00k
  • ZbiGniew KonieCzek

    President of Management Board & CEO

    • Compensation: zł2.24m
  • Bogdan Borek

    Vice President of Management Board and Finance Director

    • Tenure: 4.9yrs
    • Compensation: zł1.44m
  • Maciej Duczynski

    Director of Marketing and Development

    • Compensation: zł252.00k
  • Czeslawa Piotrowska

    Chief Accountant

    • Józef Michalik

      Vice President of the Management Board

      • Tenure: 3.9yrs
      • Compensation: zł310.00k

    Board Members

    • Zbigniew Jakubas

      Chairman of the Supervisory Board

      • Compensation: zł73.00k
    • Piotr Kaminski

      Vice President of the Supervisory Board

      • Compensation: zł62.00k
    • Agnieszka Pyszczek

      Member of the Supervisory Board

      • Compensation: zł57.00k

    Company Information

    Newag S.A.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Newag S.A.
    • Ticker: NWG
    • Exchange: WSE
    • Founded: 1876
    • Industry: Construction Machinery and Heavy Trucks
    • Sector: Capital Goods
    • Market Cap: zł1.035b
    • Shares outstanding: 45.00m
    • Website: https://www.newag.pl

    Location

    • Newag S.A.
    • ul. Wyspianskiego 3
    • Nowy Sacz
    • 33–300
    • Poland

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    NWGWSE (Warsaw Stock Exchange)YesBearer SharesPLPLNDec 2013
    N0GADB (Deutsche Boerse AG)YesBearer SharesDEEURDec 2013
    0R6ILSE (London Stock Exchange)YesBearer SharesGBPLNDec 2013

    Biography

    Newag S.A. engages in the production and sale of rail vehicles in Poland. The company offers electric and diesel multiple units and locomotives, passenger cars, trams, and wagons, as well as rolling stocks and sub­way trains. It is also involved in the periodic repair and modernization of electric and diesel locomotives, and electric multiple units, as well as subassemblies for rail vehicles. The company was founded in 1876 and is based in Nowy Sacz, Poland. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/27 22:22
    End of Day Share Price2020/01/27 00:00
    Earnings2019/09/30
    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.