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Chemring Group PLC (GB:BC88)
LSE:BC88
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Chemring
(LSE:BC88)
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Rating:68Neutral
Price Target:
106.00p
▲(9.28% Upside)
Chemring's strong financial performance and positive earnings call are the primary drivers of the score. However, technical analysis indicates overbought conditions, and the lack of P/E ratio data limits valuation insights.
Chemring (BC88) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£1.55B
Dividend Yield7.22%
Average Volume (3M)1.76K
Price to Earnings (P/E)―
Beta (1Y)N/A
Revenue GrowthN/A
EPS GrowthN/A
CountryUK
Employees2,786
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)N/A
Shares Outstanding62,500
10 Day Avg. Volume1,762
30 Day Avg. Volume1,762
Financial Highlights & Ratios
PEG Ratio0.01
Price to Book (P/B)0.74
Price to Sales (P/S)0.52
P/FCF Ratio23.22
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusHold
Number of Analyst Covering0
Chemring Business Overview & Revenue Model
Company DescriptionChemring Group PLC is a UK-based defense technology company that specializes in advanced manufacturing and engineering for defense and security markets. The company operates across several sectors, including munitions, countermeasures, explosive ordnance disposal, and sensing solutions. Chemring's core products and services include pyrotechnics, military training systems, and innovative technologies for defense applications, catering to both military and civilian markets globally.
How the Company Makes MoneyChemring generates revenue primarily through the sale of defense-related products and services. The company operates multiple segments, including Countermeasures, Munitions, and Sensors, each contributing to its overall revenue. Key revenue streams include long-term contracts with government defense departments, sales of military equipment and systems, and the provision of technical support and training services. Significant partnerships with military organizations and defense contractors enhance its market presence, while ongoing investments in research and development allow Chemring to innovate and expand its product offerings, ensuring a steady flow of income from both new and existing customers.
Chemring Earnings Call Summary
Earnings Call Date:Jun 03, 2025
(Q2-2025)
| Next Earnings Date:Dec 23, 2025
Earnings Call Sentiment Positive
The earnings call was largely positive, with significant achievements in order book growth, operational performance, and strategic initiatives. However, there were some challenges, particularly in the Sensors & Information segment and headcount reductions at Roke. Despite these setbacks, the company's strong financial position and strategic investments underpin a positive outlook.Q2-2025 Updates
Positive Updates
Record Order Book
The company achieved a record order book of GBP 1.3 billion, up 25% from the previous year.
Significant Growth in Countermeasures & Energetics
Countermeasures & Energetics revenue grew by 20%, with operating profit up 73% and margins increasing to 14.4%.
Strong Cash Conversion and Dividend Increase
The company reported strong cash conversion at 80% and declared an interim dividend of 2.7p, up 4%.
Successful Refinancing and Available Liquidity
Refinanced RCF from GBP 150 million to GBP 180 million with facilities up to GBP 275 million available.
Launch of Next-Generation EW System Deceive
Roke launched a new electronic warfare system, Deceive, which has already attracted international interest from over 15 countries.
Negative Updates
Decline in Sensors & Information Segment
Revenue in the Sensors & Information segment was down 12%, and operating profit decreased by 26% due to delays in U.K. government spending.
Headcount Reductions in Roke
Roke experienced softness in U.K. order intake, leading to strategic headcount reductions, particularly in the Futures side of the business.
Company Guidance
During the call, Chemring outlined their robust financial performance and provided detailed guidance for the future. The company's order intake reached a record GBP 488 million, a 42% increase from the previous year, contributing to a historic order book of GBP 1.3 billion, up 25%. Revenue grew by 5%, with operating profit increasing by 8%, leading to a 3% rise in earnings per share. The company also reported strong cash conversion at 80% and declared an interim dividend of 2.7p, a 4% increase. Chemring's Countermeasures & Energetics segment showed significant growth, with revenue up 20% and operating profit up 73%, increasing the margin to 14.4%. Despite challenges in the Sensors & Information segment, the company's operational margin improved to 11.6%. Chemring maintained its long-term goal of achieving GBP 1 billion in revenue by 2030, supported by strategic investments and a focus on safety, excellence, and innovation. The company also emphasized its commitment to managing risks while pursuing organic and inorganic growth opportunities.Chemring Financial Statement Overview
Summary
Chemring has demonstrated strong revenue growth and profitability with improved margins and cash generation capabilities. The company maintains a conservative financial structure with low leverage, but a decrease in free cash flow requires attention.Income Statement
Chemring has demonstrated strong revenue growth, with a significant increase from the previous year, indicating a robust growth trajectory. The gross profit margin remains high at 100%, which is unusual and suggests all revenues translate directly into gross profit. The net profit margin has improved substantially from 1.14% to 7.74%, reflecting enhanced operational efficiency. Both EBIT and EBITDA margins have improved, indicating better core profitability and operational efficiency.82
Very Positive
Balance Sheet
The company's balance sheet shows a healthy equity ratio of 51.49%, suggesting a strong reliance on equity financing. The debt-to-equity ratio stands at 0.27, indicating a conservative use of leverage. However, the return on equity has decreased, which may point to less efficient use of shareholder funds compared to previous periods.75
Positive
Cash Flow
Chemring's operating cash flow has increased, showcasing improved cash-generating ability. However, free cash flow has decreased due to higher capital expenditures. The free cash flow to net income ratio has declined, suggesting that less net income is translating into free cash flow, which could impact future flexibility.67
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 510.40M | 472.60M | 442.80M | 393.30M | 402.50M |
| Gross Profit | 510.40M | 472.60M | 442.80M | 393.30M | 402.50M |
| EBITDA | 82.70M | 67.70M | 76.20M | 75.50M | 75.10M |
| Net Income | 39.50M | 5.40M | 47.40M | 41.50M | 34.70M |
Balance Sheet | |||||
| Total Assets | 692.10M | 596.40M | 620.10M | 531.50M | 541.40M |
| Cash, Cash Equivalents and Short-Term Investments | 45.00M | 6.40M | 19.80M | 5.80M | 14.70M |
| Total Debt | 97.70M | 20.70M | 26.90M | 32.30M | 62.80M |
| Total Liabilities | 335.80M | 217.90M | 202.00M | 178.70M | 211.80M |
| Stockholders Equity | 356.30M | 378.50M | 418.10M | 352.80M | 329.60M |
Cash Flow | |||||
| Free Cash Flow | 11.40M | 31.70M | 46.00M | 45.50M | 35.10M |
| Operating Cash Flow | 81.00M | 65.90M | 80.50M | 75.70M | 75.90M |
| Investing Cash Flow | -47.60M | -39.40M | -30.50M | -34.90M | -25.40M |
| Financing Cash Flow | -37.30M | -40.20M | -35.80M | -50.40M | -32.10M |
Chemring Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | £1.55B | ― | ― | 7.22% | ― | ― | |
68 Neutral | £629.69M | 30.62 | 14.40% | 1.18% | 33.33% | 19.01% | |
66 Neutral | £791.98M | 22.77 | 8.19% | 1.08% | -13.81% | 13.86% | |
66 Neutral | £568.52M | 112.13 | 4.18% | 0.97% | 14.69% | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
63 Neutral | $54.38B | 28.29 | 17.59% | 1.83% | 11.60% | 8.03% | |
54 Neutral | £2.65B | -14.57 | -23.92% | 1.78% | 1.02% | -240.44% |
* Industrials Sector Average
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Chemring
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0.00
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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.