Sthree EBITDA jumped on 18.9% and EBITDA Margin showed almost no change
27 Jan 2020 • About Sthree (
$STHR) • By InTwits
Sthree reported FY2019 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Sthree is a growth stock: FY2019 revenue growth was 6.9%, 5 year revenue CAGR was 12.5% at FY2019 ROIC 40.2%
- EBITDA Margin is relatively stable: 4.7% in FY2019 vs. 4.3% in FY2018 vs. 5.1% in FY2015
- Sthree has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.3%.
- The company has highly profitable business model: ROIC is 40.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sthree's Revenue increased on 6.9%. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 161 pp from 50.2% to -111% in FY2019. During the last 5 years EBITDA Margin bottomed in FY2017 at 3.9% and was growing since that time.
Gross Margin showed almost no change in FY2019. Gross Margin declined at -0.61 pp per annum in FY2015-FY2019. SG&A as a % of Revenue decreased slightly on 0.59 pp from 21.7% to 21.2% in FY2019. SG&A as a % of Revenue declined at -0.36 pp per annum in FY2015-FY2019.
Net Income margin showed almost no change in FY2019. During the last 5 years Net Income margin bottomed in FY2017 at 2.5% and was growing since that time.
Investments (CAPEX, working capital and M&A)
Sthree's CAPEX/Revenue was 0.23% in FY2019. Sthree showed almost no change in CAPEX/Revenue from FY2016 to FY2019. It's average level of CAPEX/Revenue for the last three years was 0.23%.
Return on investment
The company operates at high and attractive ROIC (40.2%) and ROE (37.8%). ROIC increased on 4.0 pp from 36.3% to 40.2% in FY2019. ROE showed almost no change in FY2019. ROIC declined at -3.0 pp per annum in FY2015-FY2019. During the last 5 years ROE bottomed in FY2017 at 35.3% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.2x and Debt / EBITDA is 0.1x. Debt dropped on 91.7% while cash dropped on 70.3%.
Sthree has no short term refinancing risk: cash is higher than short term debt (332.6%).
Management team
Sthree's CEO Mark Dorman is a founder and has spent 0 years with the company. Alexander David Smith "Alex" is a Sthree's CFO. Alexander David Smith "Alex" has spent 11 years at the company.
Financial and operational results
FY ended 30 Nov -0001
Sthree ($STHR) key annual financial indicators| mln. £ | 2015 | 2016 | 2017 | 2018 | 2019 | 2019/2018 |
|---|
P&L
|
|---|
| Revenue | 849 | 960 | 1,115 | 1,258 | 1,345 | 6.9% |
| Gross Profit | 236 | 259 | 288 | 321 | 342 | 6.6% |
| SG&A | 192 | 215 | 244 | 274 | 285 | 4.0% |
| EBITDA | 43 | 43 | 44 | 54 | 64 | 18.9% |
| Net Income | 27 | 27 | 28 | 34 | 41 | 20.6% |
Balance Sheet
|
|---|
| Cash | 26 | 16 | 21 | 51 | 15 | -70.3% |
| Short Term Debt | 20 | 6 | 16 | 55 | 5 | -91.7% |
| Long Term Debt | 0 | 0 | 0 | 0 | 0 | |
Cash flow
|
|---|
| Capex | 4 | 3 | 2 | 3 | 3 | -1.9% |
Ratios
|
|---|
| Revenue growth | 13.6% | 13.1% | 16.1% | 12.9% | 6.9% | |
| EBITDA growth | 46.5% | -2.0% | 2.2% | 23.1% | 18.9% | |
|
|---|
| Gross Margin | 27.8% | 26.9% | 25.8% | 25.5% | 25.5% | -0.1% |
| EBITDA Margin | 5.1% | 4.4% | 3.9% | 4.3% | 4.7% | 0.5% |
| SG&A, % of revenue | 22.6% | 22.4% | 21.9% | 21.7% | 21.2% | -0.6% |
| Net Income Margin | 3.1% | 2.8% | 2.5% | 2.7% | 3.1% | 0.3% |
| CAPEX, % of revenue | 0.4% | 0.3% | 0.2% | 0.3% | 0.2% | -0.0% |
|
|---|
| ROIC | 50.2% | 46.2% | 43.4% | 36.3% | 40.2% | 4.0% |
| ROE | 48.2% | 40.3% | 35.3% | 37.6% | 37.8% | 0.2% |
| Net Debt/EBITDA | -0.1x | -0.2x | -0.1x | 0.1x | -0.2x | -0.2x |
Peers in Support Services
Below we provide Sthree benchmarking against other companies in Support Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Camco Clean Energy ($CCE) | 99.4% | -2.5% | 9.3% | 97,196.8% | |
| Rws Hldgs ($RWS) | | 28.1% | 34.5% | 86.6% | 16.2% |
| Croma Security Solutions Group ($CSSG) | 6.9% | 20.2% | 15.9% | 59.2% | |
| Grafenia ($GRA) | -43.3% | -2.3% | -3.0% | 40.1% | |
| Vp ($VP.) | 12.3% | 1.5% | 19.2% | 22.1% | |
| |
|---|
| Median (24 companies) | 6.9% | 2.2% | 6.9% | 8.7% | 4.8% |
|---|
| Sthree ($STHR) | | 13.1% | 16.1% | 12.9% | 6.9% |
Top companies by Gross margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Vianet Group ($VNET) | 69.2% | 70.1% | 69.7% | 69.9% | |
| Ienergizer Ltd ($IBPO) | 72.7% | 71.3% | 71.2% | 69.7% | |
| Prime People ($PRP) | 61.4% | 59.2% | 54.1% | 57.4% | |
| Grafenia ($GRA) | 70.8% | 66.3% | 63.0% | 57.0% | |
| Murgitroyd Group ($MUR) | 55.4% | 53.7% | 54.6% | 55.2% | |
| |
|---|
| Median (21 companies) | 28.4% | 27.3% | 28.1% | 31.6% | 31.6% |
|---|
| Sthree ($STHR) | 27.8% | 26.9% | 25.8% | 25.5% | 25.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Northgate ($67GX) | 39.4% | 38.3% | 35.9% | 35.4% | |
| Vp ($VP.) | 26.2% | 28.4% | 28.6% | 27.2% | |
| Ienergizer Ltd ($IBPO) | 17.1% | 22.9% | 22.9% | 24.5% | |
| Vianet Group ($VNET) | 27.1% | 22.1% | 17.5% | 22.8% | |
| Rws Hldgs ($RWS) | 23.1% | 26.4% | 25.5% | 20.8% | 23.4% |
| |
|---|
| Median (23 companies) | 7.6% | 5.7% | 5.7% | 7.1% | 14.9% |
|---|
| Sthree ($STHR) | 5.1% | 4.4% | 3.9% | 4.3% | 4.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Vp ($VP.) | 25.7% | 24.1% | 26.0% | 23.6% | |
| Newmark Security ($NWT) | 1.3% | 0.9% | 1.3% | 9.8% | |
| Grafenia ($GRA) | 1.6% | 4.1% | 1.1% | 7.8% | |
| Latham(James) ($LTHM) | 0.2% | 1.1% | 3.0% | 5.0% | |
| Camco Clean Energy ($CCE) | 0.5% | 0.7% | 4.4% | 4.6% | |
| |
|---|
| Median (23 companies) | 1.0% | 1.1% | 0.9% | 1.1% | 0.8% |
|---|
| Sthree ($STHR) | 0.4% | 0.3% | 0.2% | 0.3% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Ienergizer Ltd ($IBPO) | 10.4% | 17.4% | 18.1% | 19.8% | |
| Mortice Ltd ($MORT) | 21.9% | 14.5% | 23.2% | 18.4% | |
| Croma Security Solutions Group ($CSSG) | 2.4% | 2.4% | 4.0% | 18.2% | |
| Cpl Resources ($CPS) | 18.1% | 17.5% | 15.2% | 17.4% | |
| Latham(James) ($LTHM) | 16.8% | 19.2% | 19.3% | 17.4% | |
| |
|---|
| Median (27 companies) | 10.4% | 7.8% | 7.4% | 7.9% | 12.3% |
|---|
| Sthree ($STHR) | 50.2% | 46.2% | 43.4% | 36.3% | 40.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 |
|---|
| Mitsubishi Corp ($MBC) | 12.5x | 53.4x | 2.9x | 6.2x | |
| Grafenia ($GRA) | -0.6x | -0.3x | -0.3x | 3.8x | |
| Camco Clean Energy ($CCE) | | | | 2.9x | |
| Premier Farnell ($PFLA) | 3.1x | 2.2x | 1.5x | 2.2x | |
| Vp ($VP.) | 1.2x | 1.5x | 1.4x | 2.1x | |
| |
|---|
| Median (20 companies) | 0.2x | 0.3x | 0.5x | 0.8x | -0.5x |
|---|
| Sthree ($STHR) | -0.1x | -0.2x | -0.1x | 0.1x | -0.2x |
