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Melrose
(LSE:MRO)
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Rating:58Neutral
Price Target:
536.00 p
▲(5.06% Upside)
Action:Reiterated
Date:08/03/26
The score is driven primarily by improving profitability and a generally positive earnings-call outlook, but is held back by weak cash-flow quality, higher leverage, and a bearish technical setup (price below key moving averages with negative MACD). Valuation is also relatively expensive (high P/E with modest yield), increasing sensitivity to execution and Garden Grove-related uncertainties.
Positive Factors
Strong revenue, profit and margin growth
Double-digit growth, higher operating profit and margin expansion indicate stronger execution and operating leverage. If sustained across aerospace programs, these gains can support durable earnings growth rather than relying solely on market recovery.
Negative Factors
Garden Grove disruption and regulatory uncertainty
The Garden Grove incident creates ongoing production, regulatory and recovery uncertainty beyond the initial event. Reduced site output, uncertain acrylic production and potential liabilities could pressure earnings, cash flow and management attention over coming months.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong revenue, profit and margin growth
Double-digit growth, higher operating profit and margin expansion indicate stronger execution and operating leverage. If sustained across aerospace programs, these gains can support durable earnings growth rather than relying solely on market recovery.
Read all positive factors
Melrose (MRO) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£6.17B
Dividend Yield1.05%
Average Volume (3M)4.69M
Price to Earnings (P/E)38.1
Beta (1Y)1.50
Revenue Growth8.59%
EPS Growth-48.09%
CountryUK
Employees12,808
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.13
Shares Outstanding1,246,097,500
10 Day Avg. Volume4,410,678
30 Day Avg. Volume4,689,840
Financial Highlights & Ratios
PEG Ratio-0.02
Price to Book (P/B)2.65
Price to Sales (P/S)2.09
P/FCF Ratio62.89
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£695.00Price Target Upside36.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
EPS Forecast (FY)0.35
Revenue Forecast (FY)£3.83B
Melrose Business Overview & Revenue Model
Company Description
Melrose Industries PLC, founded in London in 2003, is a global enterprise with core operations spanning the aerospace, automotive, powder metallurgy, and various other industrial sectors. Its geographical reach extends across the United Kingdom, t...
How the Company Makes Money
Melrose makes money by manufacturing and selling aerospace components and systems to customers, with revenue primarily generated from supplying parts and assemblies used in the production and operation of aircraft and aircraft engines. Its earning...
Melrose Earnings Call Summary
Earnings Call Date:Jul 31, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Mar 04, 2027
Earnings Call Sentiment Positive
The call conveyed a predominantly positive operational and financial performance: double‑digit revenue and profit growth, margin expansion, improving free cash flow, strong engines momentum, safety and productivity gains, and clear strategic progress on additive fabrication and uncrewed programs. The principal negative driver was the Garden Grove incident — operational disruption, near‑term profit and cash impacts, expected exceptional costs (GBP 25–30M in H2), legal/regulatory uncertainty and a paused buyback — all of which introduce headline risk and some near‑term uncertainty. Management reiterated FY guidance excluding the Garden Grove impact and remains confident in medium‑term cash targets (GBP 600M FCF by 2029). On balance, the positives across growth, margins, cash trajectory and strategic positioning outweigh the manageable but material Garden Grove headwinds.Positive Updates
Group revenue and profit growth
Group revenue grew 10% (constant currency) in H1 2026 and group operating profit increased 16% to GBP 347M (nearly GBP 350M), with EPS improving by over 20% year-on-year.
Negative Updates
Garden Grove thermal incident and production disruption
Thermal incident in late May at Garden Grove (MMA storage tank) forced an immediate production halt, evacuation of an estimated 50k–60k people, and a pause of base acrylic production. Manufacturing reopened in July using existing/third‑party acrylic, but acrylic production timing remains uncertain and operational restart is regulator‑dependent.
Read all updates
Q2-2026 Updates
Positive
Negative
Group revenue and profit growth
Group revenue grew 10% (constant currency) in H1 2026 and group operating profit increased 16% to GBP 347M (nearly GBP 350M), with EPS improving by over 20% year-on-year.
Read all positive updates
Company Guidance
Management reiterated 2026 guidance (excluding the uncertain Garden Grove impact) for group revenue of £3.75–3.95bn (midpoint ≈10% like‑for‑like growth) and pre‑Garden Grove operating profit of £700–750m, with underlying cash flow expected at £150–200m and a longer‑term free cash flow target of £600m in 2029. They quantified Garden Grove: H1 revenue/profit hits of £16m/£9m, a projected H2 site output at ~50% with ≈£6m revenue impact per month, H1 exceptional P&L costs £13m (£5m cash paid) and a further £25–30m of exceptional cash costs expected in H2 (all expected to be cash; insurance/legal recoverability remains under review), and accordingly paused the £175m buyback (£12m spent) after completing a prior £250m program. H1 results included revenue +10%, operating profit £347m (+16%), margin 18.5% (+50bps), EPS >20% YoY, free cash flow +£13m (improvement of £67m YoY), capex £52m (FY guide £120–140m), net debt £1.53bn (1.8x EBITDA, down from 2.0x last year and within the 1.5–2x policy), a £15m net factoring outflow (pre‑factoring cash would be +£28m), a £27m GTF payment in H1 (FY guide £50m; within a £200m envelope), and an unexpected June customer receipt acceleration of £20–25m; operational metrics included a 25% H1 reduction in total incident rate (over 65% vs three years), DIO down 7 days, productivity up ~230bps (3pp) and cost of poor quality down 12%. Management said the headline FY guidance stands excluding Garden Grove and will provide updates as regulatory, legal and insurance clarity emerges.Melrose Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
61
Positive
Cash Flow
46
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.74B | 3.59B | 3.47B | 3.35B | 7.54B | 6.65B |
| Gross Profit | 1.02B | 668.00M | 822.00M | 654.00M | 571.00M | 410.00M |
| EBITDA | 1.04B | 1.02B | 392.00M | 385.00M | 146.00M | 324.00M |
| Net Income | 160.00M | 370.00M | -49.00M | -1.02B | -292.00M | -500.00M |
Balance Sheet | ||||||
| Total Assets | 7.91B | 7.60B | 7.44B | 6.93B | 13.99B | 14.02B |
| Cash, Cash Equivalents and Short-Term Investments | 200.00M | 166.00M | 88.00M | 58.00M | 355.00M | 473.00M |
| Total Debt | 2.05B | 1.90B | 1.65B | 822.00M | 1.86B | 1.74B |
| Total Liabilities | 5.05B | 4.75B | 4.59B | 3.36B | 6.79B | 6.46B |
| Stockholders Equity | 2.86B | 2.83B | 2.84B | 3.57B | 7.13B | 7.51B |
Cash Flow | ||||||
| Free Cash Flow | 202.00M | 119.00M | -244.00M | -66.00M | -31.00M | 81.00M |
| Operating Cash Flow | 289.00M | 214.00M | -121.00M | 29.00M | 267.00M | 317.00M |
| Investing Cash Flow | -75.00M | -82.00M | -68.00M | 721.00M | 129.00M | 2.46B |
| Financing Cash Flow | -139.00M | -58.00M | 219.00M | -966.00M | -599.00M | -2.47B |
Melrose Technical Analysis
Negative
510.20
Price Trends
479.01
Positive
482.86
Positive
529.86
Negative
Market Momentum
6.10
Negative
49.62
Neutral
60.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:MRO, the sentiment is Negative. The current price of 510.2 is above the 20-day moving average (MA) of 489.67, above the 50-day MA of 479.01, and below the 200-day MA of 529.86, indicating a neutral trend. The MACD of 6.10 indicates Negative momentum. The RSI at 49.62 is Neutral, neither overbought nor oversold. The STOCH value of 60.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:MRO.
Melrose Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | £7.23B | 22.20 | 32.41% | 1.12% | 7.67% | 45.97% | |
76 Outperform | £3.95B | 32.57 | 21.48% | 1.70% | 2.22% | 25.89% | |
70 Outperform | £7.36B | 32.96 | 13.71% | 1.75% | -31.27% | -13.26% | |
66 Neutral | £5.10B | 25.63 | 16.03% | 2.40% | 5.07% | 21.70% | |
65 Neutral | £6.98B | 26.04 | 13.45% | 1.59% | 5.84% | -14.62% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
58 Neutral | £6.17B | 38.10 | 5.63% | 1.53% | 8.59% | -48.09% |
* Industrials Sector Average
GB:MRO
Melrose
486.10
-98.96
-16.91%
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Melrose Corporate Events
Business Operations and StrategyLegal ProceedingsRegulatory Filings and Compliance
Melrose details $100m claims plan and restart timetable for GKN’s Garden Grove plant
Negative
Aug 25, 2026
Melrose Industries has outlined key developments following the incident at GKN Aerospace’s Garden Grove facility, including a claims programme of up to $100 million for eligible residents and businesses affected by the May evacuation. The pr...
Business Operations and StrategyStock Buyback
Melrose Boosts Treasury Stock with July Share Buyback
Positive
Aug 3, 2026
Melrose Industries PLC has repurchased 24,800 ordinary shares between 27 and 30 July 2026 via Merrill Lynch International, at volume-weighted average prices of around 474 to 477 pence per share on the London Stock Exchange. The company intends to ...
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresLegal Proceedings
Melrose maintains profit momentum despite Garden Grove hit and pauses £175m buyback
Positive
Jul 31, 2026
Melrose Industries reported a strong first half to 30 June 2026, with revenue up 10% to £1.87 billion, adjusted operating profit up 16% to £347 million and margins improving to 18.5%. Engines led growth with 19% higher sales and robust o...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock with Fresh Share Buybacks
Positive
Jul 27, 2026
Melrose Industries PLC has continued its share buyback programme, purchasing 31,000 ordinary shares of £0.001 each on the London Stock Exchange between 20 and 24 July 2026 through Merrill Lynch International at volume-weighted average prices ...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock with July Share Buybacks
Positive
Jul 20, 2026
Melrose Industries PLC has continued its share buyback activity, purchasing a series of ordinary shares through Merrill Lynch International on the London Stock Exchange between 13 and 17 July 2026. The transactions were executed at volume-weighted...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock with July Share Buybacks
Positive
Jul 13, 2026
Melrose Industries PLC has continued to deploy its share buyback strategy, repurchasing tranches of ordinary shares through Merrill Lynch International on the London Stock Exchange during the period from 6 July to 10 July 2026. The trades were exe...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock with Latest Share Buybacks
Positive
Jul 13, 2026
Melrose Industries PLC has continued its share buyback activity, purchasing a series of ordinary shares through Merrill Lynch International between 6 July and 10 July 2026 on the London Stock Exchange. The trades, executed at volume-weighted avera...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock With Latest Share Buybacks
Positive
Jul 6, 2026
Melrose Industries PLC has disclosed the repurchase of 24,400 ordinary shares over four trading days between 29 June and 2 July 2026 on the London Stock Exchange, executed via Merrill Lynch International as part of its ongoing share buyback activi...
Business Operations and StrategyExecutive/Board Changes
Melrose CFO boosts stake and receives performance-linked share awards
Positive
Jun 29, 2026
Melrose Industries has disclosed a share purchase by its chief financial officer, Ross McCluskey, who bought 21,434 ordinary shares at 474.96 pence each on 25 June. The transaction reflects his personal investment in the company following his move...
Regulatory Filings and Compliance
Melrose CFO Increases Stake with Purchase of Additional Shares
Positive
Jun 29, 2026
Melrose Industries PLC disclosed that its Chief Financial Officer, Ross McCluskey, purchased 3,667 ordinary shares in the company on 25 June 2026 at a price of 474.96 pence per share, taking his total holding to 25,101 shares. The transaction, con...
Business Operations and StrategyStock Buyback
Melrose adds to treasury stock with targeted June share buybacks
Positive
Jun 29, 2026
Melrose Industries has continued its share buyback activity, purchasing a series of tranches of ordinary shares between 22 and 26 June 2026 via Merrill Lynch International on the London Stock Exchange. The trades were executed at volume-weighted a...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock with Targeted Share Buyback
Positive
Jun 22, 2026
Melrose Industries PLC has executed a share buyback, purchasing 31,300 of its ordinary shares on the London Stock Exchange between 15 and 19 June 2026 through Merrill Lynch International. The company will hold these repurchased shares in treasury,...
Regulatory Filings and Compliance
Melrose Chair Chris Grigg Increases Stake With £94,000 Share Purchase
Positive
Jun 16, 2026
Melrose Industries PLC disclosed that its non-executive chair, Chris Grigg, and his wife Fionna jointly purchased 20,000 ordinary shares in the company on 16 June 2026 at 472.19 pence per share, bringing their total holding to 83,637 shares. The i...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock with Targeted Share Buybacks
Positive
Jun 15, 2026
Melrose Industries PLC has continued its share buyback activity, repurchasing a total of 31,700 ordinary shares between 8 June and 12 June 2026 on the London Stock Exchange via Merrill Lynch International. The purchases were made at volume-weighte...
Regulatory Filings and Compliance
Melrose Director Guy Hachey Increases Stake with Share Purchase
Positive
Jun 12, 2026
Melrose Industries PLC disclosed that non-executive director Guy Hachey purchased 18,000 ordinary shares in the company on 11 June 2026, at a price of 449.06 pence per share. Following this transaction, Hachey’s total holding in Melrose has ...
Business Operations and StrategyStock Buyback
Melrose Expands Treasury Stock with Further Share Buybacks
Positive
Jun 8, 2026
Melrose Industries PLC has continued its share buyback activity, purchasing just over 91,000 ordinary shares between 1 and 5 June 2026 on the London Stock Exchange at volume-weighted average prices ranging from about 450p to 472p. The company plan...
Business Operations and StrategyStock Buyback
Melrose Adds to Treasury Stock With New Share Buybacks
Positive
Jun 1, 2026
Melrose Industries PLC disclosed that it has repurchased a total of 261,000 ordinary shares on the London Stock Exchange between 26 May and 29 May 2026, at volume-weighted average prices ranging from about 475p to 486p per share. The shares, bough...
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.