QinetiQ Group plc – Value Analysis (LONDON:QQ) : December 21, 2017

Capitalcube gives QinetiQ Group plc a score of 63.

Our analysis is based on comparing QinetiQ Group plc with the following peers – Ultra Electronics Holdings plc, Chemring Group PLC, BAE Systems plc, Rolls-Royce Holdings plc and Cobham plc (ULE-GB, CHG-GB, BA-GB, RR-GB and COB-GB).

Investment Outlook

QinetiQ Group plc has a fundamental score of 63 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It trades at a lower Price/Book multiple (2.07) than its peer median (2.88).
  • We classify QQ-GB as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • QQ-GB has relatively high profit margins while operating with median asset turns.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • QQ-GB‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • QQ-GB‘s revenues have grown more slowly than the peer median over the last few years, which combined with the stock price’s relatively low P/E ratio suggests substandard growth expectations relative to peers.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • QQ-GB currently does not have any debt.

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Leverage & Liquidity

QQ-GB currently does not have any debt.

  • We consider the company to have a Quick & Able profile as it currently does not have any debt. In comparison, the median level of debt as percent of enterprise value for its peer group is currently 21.15%.
  • All 5 peers for the company have an outstanding debt balance.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Ultra Electronics Holdings plc 20.46 1.92 7.61 27.52
Chemring Group PLC 30.63 1.42 3.66 48.84
BAE Systems plc 21.85 0.98 1.63 34.6
Rolls-Royce Holdings plc 20.29 1.38 12.06 16.97
Cobham plc 26.68 1.54 -2.74 -1.83
QinetiQ Group plc 0 1.26 122.78 999
Peer Median 21.15 1.4 5.63 31.06
Best In Class 20.29 1.92 122.78 999

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Company Profile

QinetiQ Group plc engages in the provision of technology development and consultancy services to the defense, security, and related markets. It operates through the EMEA Services and Global Products segments. The EMEA Services segment technical assurance, test and evaluation and training services. The Global Products segment fibre sensing solutions to deliver decision-ready data in multiple vertical markets. The company was founded on July 1, 2001 and is headquartered in Farnborough, the United Kingdom.

Disclaimer

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