Chemring (BC88) AI Stock Analysis

Chemring

(LSE:BC88)

Select Model

Rating:54Neutral

Price Target:GBX 99.00▲(2.06% Upside)

Action:reiterated

Date:10/03/26

The score is held back primarily by mixed financial quality—negative free cash flow and a notable increase in leverage—despite improved profitability. Technicals are neutral with limited momentum, and valuation is a key headwind given the high P/E and zero dividend yield.

Positive Factors

Improved ProfitabilityImproved net, EBIT, and EBITDA margins indicate stronger operating leverage and better profitability in the latest year. If maintained, this can increase internally generated earnings, support investment in defence capabilities, and strengthen resilience across future contract cycles.

Negative Factors

Revenue Decline and VolatilityThe latest revenue contraction and history of earnings volatility weaken confidence that recent profitability improvements will be consistent. Uneven demand across defence procurement cycles can make planning, resource allocation, and sustained margin performance more difficult over the next several quarters.

Chemring (BC88) vs. iShares MSCI United Kingdom ETF (EWC)

Market Cap: GBP 1.53B
Dividend Yield: 0.00%
Average Volume (3M): 1,762
Price to Earnings (P/E): 0.0
Beta (1Y): ―
Revenue Growth: ―
EPS Growth: ―
Country: UK
Employees: 2,786
Sector: Industrials
Sector Strength: 63
Industry: Aerospace & Defense

Chemring Business Overview & Revenue Model

Company Description

Chemring Group PLC is a prominent company specializing in defense technology, structured around two core operational segments. The first, Sensors and Information, is responsible for designing and manufacturing electronic countermeasures, alongside sy...

How the Company Makes Money

Chemring makes money mainly by selling defence and security products and services to government agencies, ministries of defence, and prime defence contractors. Revenue is primarily generated through two operating segments: (1) Countermeasures—manufac...

Chemring Earnings Call Summary

Earnings Call Date:Dec 08, 2025(Q4-2025)|% Change Since:0.00%|Next Earnings Date:Jan 16, 2019

Earnings Call SentimentPositive

The call presented a largely positive operational and financial picture: record order intake and order book, modest revenue growth, expanding margins, exceptional cash conversion and strong Energetics and countermeasures performance underpin medium-term growth. Notable near-term challenges include Roke's decline driven by UK budget timing, a material CapEx increase in Norway (partially grant-funded), higher near-term capital spend and lower cash conversion guidance for FY '26, and some underperforming legacy assets being divested. On balance, the strategic wins, strong balance sheet, and execution evidence outweigh the short-term timing and cost pressures.

Positive Updates

Record Order Intake and Order Book

Order intake reached GBP 781 million, up 20% year-on-year, delivering a record order book of GBP 1.3 billion (up 32% YoY), providing strong visibility into future revenue.

Negative Updates

Roke Revenue and Profit Decline

Sensors & Information (Roke) revenue fell 18% to GBP 175 million and operating profit declined 25% due to softness in UK government contracting and delayed order placement; segment operating margin was maintained at ~17.8% through cost actions, but order cover is modest (45% for FY '26).

Company Guidance

Guidance was unchanged for FY26 with c.76% of revenue already covered and a similar H2 weighting to FY25; group targets include Countermeasures & Energetics growth of low double-digits (Energetics mid‑teens, Countermeasures low single‑digits) and Sensors & Information mid‑double‑digit growth, with U.S. Sensors flat as JBTDS waits FRP (expected FY27) and Roke returning to near FY24 revenue with H2‑weighted recovery and a target of GBP250m by FY28; order cover remains strong (95% for ’26, 93% for ’27, 59% for ’28), CapEx for FY26 is guided at GBP100–110m (higher due to Norway), interest costs about GBP10m, cash conversion expected 80–85% in FY26 (returning to normal in the medium term), leverage target remains <1.5x, dividend cover target of 2.5x is being maintained, GBP36m remains on the buyback, and the long‑term ambition is to double revenue to GBP1bn by 2030 while maintaining strong margins.

Chemring Financial Statement Overview

Summary

Income statement strength (improving profitability and margins in 2025) is outweighed by weaker cash-flow quality and higher financial risk: revenue declined (~4.6%), leverage stepped up materially versus 2023, and free cash flow turned negative (about -£5.6m) despite positive operating cash flow.

Income Statement

71Positive

Balance Sheet

58Neutral

Cash Flow

46Neutral

Financial statement breakdown
Breakdown	TTM	Oct 2025	Oct 2024	Oct 2023	Oct 2022	Oct 2021
Income Statement
Total Revenue	500.50M	497.50M	510.40M	472.60M	401.00M	393.30M
Gross Profit	485.30M	497.50M	510.40M	472.60M	401.00M	393.30M
EBITDA	94.20M	100.20M	82.70M	67.10M	71.20M	75.50M
Net Income	33.90M	48.20M	39.50M	5.40M	47.40M	41.50M
Balance Sheet
Total Assets	908.10M	863.10M	692.10M	596.40M	620.10M	531.50M
Cash, Cash Equivalents and Short-Term Investments	44.70M	65.30M	45.00M	6.40M	19.80M	5.80M
Total Debt	189.20M	154.30M	97.70M	20.80M	27.00M	32.30M
Total Liabilities	539.40M	481.10M	335.80M	217.90M	202.00M	178.70M
Stockholders Equity	368.70M	382.00M	356.30M	378.50M	418.10M	352.80M
Cash Flow
Free Cash Flow	-13.50M	-5.60M	11.40M	31.70M	46.00M	45.50M
Operating Cash Flow	76.00M	84.60M	81.00M	65.90M	80.50M	75.70M
Investing Cash Flow	-92.60M	-85.70M	-47.60M	-39.40M	-30.50M	-34.90M
Financing Cash Flow	2.70M	43.30M	-37.30M	-40.20M	-35.80M	-50.40M

Chemring Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

GB:BC88 against its peers
Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GB:BA	75Outperform	GBP 60.55B	29.57	17.49%	1.83%	7.20%	8.54%
GB:QQ	69Neutral	GBP 2.75B	27.20	19.34%	2.04%	-0.47%	―
GB:CHRT	68Neutral	GBP 652.04M	27.69	13.59%	1.27%	13.46%	15.89%
Sector *	63Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
GB:BC88	54Neutral	GBP 1.53B	0.00	13.06%	0.00%	―	―
GB:VEL	52Neutral	GBP 7.79M	-5.04	-32.89%	―	-17.64%	-106.57%
GB:ALRT	39Underperform	GBP 17.24M	-1.85	-241.82%	―	―	―

* Industrials Sector Average

Performance Comparison

GB:BC88 and its peers over the selected period
Ticker	Company Name	Price	Change	% Change
GB:BC88	Chemring Group plc	97.00	0.00	0.00%
GB:BA	Bae Systems Plc	2070.00	240.91	13.17%
GB:CHRT	Cohort plc	1412.00	123.25	9.56%
GB:QQ	QinetiQ Group plc	540.50	69.43	14.74%
GB:ALRT	Defence Holdings Plc	0.60	-1.54	-71.96%
GB:VEL	Velocity Composites Plc	14.25	-7.25	-33.72%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.

Date of analysis: Oct 03, 2026

Chemring AI Stock Analysis