Next Fifteen Communications Group Plc – Value Analysis (LONDON:NFC) : December 21, 2017

Capitalcube gives Next Fifteen Communications Group Plc a score of 75.

Our analysis is based on comparing Next Fifteen Communications Group Plc with the following peers – Huntsworth plc, Wey Education PLC and Begbies Traynor Group plc (HNT-GB, WEY-GB and BEG-GB).

Investment Outlook

Next Fifteen Communications Group Plc has a fundamental score of 75 and has a relative valuation of NEUTRAL.

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 (4.34).
  • We classify NFC-GB as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • NFC-GB has relatively high profit margins while operating with median asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • NFC-GB‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • While NFC-GB‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • NFC-GB has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

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

  • With debt at a relatively low 10.80% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 18.67%), and a well-cushioned interest coverage level of 12.39x, NFC-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 WEY-GB.

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

  • NFC-GB‘s interest coverage is its lowest over the last four years and compares to a high of 24.71x in 2016.
  • While its interest coverage decreased to 12.39x from 24.71x (in 2016), its peer median increased during this period to 11.55x from 4.83x.
  • Interest coverage fell 19.04 points relative to peers.
  • NFC-GB‘s debt-EV is its lowest over the last four years and compares to a high of 18.78% in 2013.
  • Though its debt-EV decreased to 10.80% from 12.11% (in 2016), its peer median remained relatively stable during this period at 18.67%.
  • Relative to peers, debt-EV fell 1.43 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Huntsworth plc 29.5 1.87 10.71 32.34
Wey Education PLC 0 1.96 No interest exp 999
Begbies Traynor Group plc 26.55 2.04 6.27 34.56
Next Fifteen Communications Group plc 10.8 1.27 12.39 71.67
Peer Median 18.67 1.91 11.55 53.12
Best In Class 10.8 2.04 No interest exp 999

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Company Profile

Next Fifteen Communications Group Plc provides communications services. The company includes agencies, spanning digital content, marketing, PR, consumer, technology, marketing software, market research, public affairs and policy communications. Next Fifteen Communications Group was founded by Thomas W. Lewis and Mark Adams on August 12, 1981 and is headquartered in London, the United Kingdom.

Disclaimer

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