IWG Plc – Value Analysis (LONDON:IWG) : December 29, 2017

Capitalcube gives IWG Plc a score of 88.

Our analysis is based on comparing IWG Plc with the following peers – Hogg Robinson Group plc, Begbies Traynor Group plc and Management Consulting Group PLC (HRG-GB, BEG-GB and MMC-GB).

Investment Outlook

IWG Plc has a fundamental score of 88 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It currently trades at a Price/Book ratio of (3.16).
  • IWG-GB‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • IWG-GB has a successful operating model with relatively high net profit margins and asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • IWG-GB‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s median gross margin and relatively high pre-tax margins suggest non-differentiated product portfolio but with tight cost control relative to peers.
  • While IWG-GB‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • IWG-GB has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

IWG-GB has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 12.01% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 17.33%), and a well-cushioned interest coverage level of 14.26x, IWG-GB can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 3 chosen peers for the company, only 2 of the stocks have an outstanding debt balance. Companies with no debt include MMC-GB.

IWG-GB has maintained its Quick & Able profile from the prior year-end.

  • IWG-GB‘s interest coverage is less than (but within one standard deviation of) its four-year average interest coverage of 35.02x.
  • While its interest coverage decreased to 14.26x from 19.27x (in 2015), its peer median increased during this period to 8.41x from 5.19x.
  • Interest coverage fell 8.23 points relative to peers.
  • IWG-GB‘s debt-EV is its highest over the last four years and compares to a low of 1.34% in 2012.
  • While its debt-EV increased to 12.01% from 7.77% (in 2015), its peer median decreased during this period to 17.33% from 32.34%.
  • Relative to peers, debt-EV rose 19.25 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Hogg Robinson Group plc 22.66 0.91 10.56 84.56
Begbies Traynor Group plc 26.55 2.04 6.27 34.56
Management Consulting Group PLC 0 2.04 -13.37 999
IWG Plc 12.01 0.57 14.26 120.61
Peer Median 17.33 1.47 8.41 102.58
Best In Class 12.01 2.04 14.26 999

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Company Profile

IWG Plc operates as a holding company. The firm engages in the provision of spectrum of work solutions across multiple brands. The company was founded on September 27, 2016 and is headquartered in Zug, Switzerland.


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