Redcentric (RCN) AI Stock Analysis

• Market Cap: £201.72M
• Dividend Yield: 2.84%
• Average Volume (3M): 43.34K
• Price to Earnings (P/E): 325.0
• Beta (1Y): 0.02
• Revenue Growth: 3.57%
• EPS Growth: N/A
• Country: UK
• Employees: 659
• Sector: Technology
• Sector Strength: 65
• Industry: Information Technology Services
• EPS (TTM): <0.01
• Shares Outstanding: 159,145,920
• 10 Day Avg. Volume: 23,589
• 30 Day Avg. Volume: 43,344
• PEG Ratio: -0.75
• Price to Book (P/B): 3.52
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 22.12
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

Redcentric's overall stock score reflects its strong revenue growth and positive cash flow generation, tempered by profitability challenges and high leverage. Technical indicators suggest a cautious market sentiment with limited momentum. The company's valuation appears stretched due to a high P/E ratio, despite a reasonable dividend yield. The increased stake by Lombard Odier is a positive corporate event, indicating confidence in Redcentric's future.

Redcentric Business Overview & Revenue Model

Company Description

Redcentric plc provides IT managed services for public and private sector in the United Kingdom. It offers network services, including connectivity, software-defined wide area network (WAN), local area network, managed WAN, secure remote access, and managed wireless network services; and cloud services consisting of cloud consultancy and migration, infrastructure as a service, hybrid cloud, colocation, data backup, managed Microsoft 365, disaster recovery, platform as a service, and virtual desktop services. The company also provides communication services, such as IP telephony, unified communications, collaboration, SIP trunks, call management and reporting, and call recording services; and IT security services, including network security, application security, access management, security information and event management, endpoint management, distributed denial of service mitigation, vulnerability scanning and management, and security monitoring and analytics services. In addition, it offers professional services, such as IT consulting, application modernization, implementation, supply chain management, and support and maintenance services. The company was founded in 1997 and is headquartered in Harrogate, the United Kingdom.

How the Company Makes Money

Redcentric generates revenue primarily through its managed IT services and solutions. The company's key revenue streams include subscription-based services for cloud hosting, network connectivity, and IT security solutions. It also earns from professional services like IT consulting and implementation. Redcentric partners with technology vendors and leverages its own data centers to deliver reliable and secure services, which attract a diverse clientele ranging from SMEs to large enterprises. These partnerships and its investment in robust IT infrastructure are significant factors contributing to its earnings.

Redcentric Financial Statement Overview

Summary

Redcentric demonstrates strong revenue growth and effective cost management with a robust gross profit margin. However, profitability challenges are evident with negative net profit margin and ROE, and high leverage presents financial risks. The company shows strong cash flow generation, but the translation of net income to free cash flow remains an issue.

Income Statement

The company shows a substantial revenue growth of 15.16% for the latest year, indicating a positive growth trajectory. However, the net profit margin is negative at -2.11%, suggesting challenges in achieving profitability. The gross profit margin remains strong at 68.65%, highlighting effective cost management. The EBIT margin at 0.52% and EBITDA margin at 15.03% demonstrate moderate operational efficiency with room for improvement.

Balance Sheet

The debt-to-equity ratio is 1.39, pointing towards a high leverage position which could pose financial risk. The return on equity is negative at -6.32%, reflecting recent profitability issues. The equity ratio stands at 29.53%, indicating a relatively low level of equity financing. The balance sheet shows a mixed picture with high leverage and negative ROE as potential concerns.

Cash Flow

The operating cash flow to net income ratio is quite strong at -5.64, implying efficient cash generation relative to accounting profits. Free cash flow growth is notable at 44.33%, marking significant improvement in cash availability. The free cash flow to net income ratio is -2.52, which emphasizes concerns about translating net income into free cash flow.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
163.15M	141.67M	93.33M	91.40M	87.48M
	Gross Profit
112.03M	92.14M	52.58M	51.02M	47.74M
	EBIT
852.00K	-867.00K	8.38M	5.49M	-8.66M
	EBITDA
24.52M	14.89M	22.68M	20.75M	7.53M
	Net Income Common Stockholders
-3.44M	-9.25M	6.94M	9.01M	-10.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.13M	1.37M	1.80M	5.25M	3.71M
	Total Assets
184.51M	195.42M	122.57M	122.64M	141.57M
	Total Debt
75.50M	74.33M	18.45M	20.82M	38.26M
	Net Debt
72.36M	72.96M	16.64M	15.57M	34.55M
	Total Liabilities
130.02M	137.23M	50.72M	50.55M	81.77M
	Stockholders Equity
54.48M	58.19M	71.85M	72.09M	59.80M
Cash Flow		Free Cash Flow
8.67M	6.01M	13.71M	13.07M	12.10M
	Operating Cash Flow
19.42M	12.38M	16.48M	15.38M	16.33M
	Investing Cash Flow
-11.63M	-32.98M	-7.44M	-2.31M	-4.23M
	Financing Cash Flow
-5.91M	20.26M	-12.51M	-11.51M	-15.58M

Redcentric Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 127.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:RCN, the sentiment is Positive. The current price of 127 is above the 20-day moving average (MA) of 123.26, above the 50-day MA of 122.49, and above the 200-day MA of 122.48, indicating a bullish trend. The MACD of 1.06 indicates Negative momentum. The RSI at 63.72 is Neutral, neither overbought nor oversold. The STOCH value of 64.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:RCN.

Redcentric Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FDM	72 Outperform	£260.73M	12.70	28.48%	12.16%	-22.84%	-49.60%
Sector *	60 Neutral	$11.39B	10.50	-6.42%	2.97%	7.77%	-11.17%
RCN	57 Neutral	£201.72M	325.00	1.06%	2.84%	3.57%	―
KBT	57 Neutral	£38.65M	72.69	-8.92%	―	-46.97%	―
TPX	50 Neutral	£22.12M	―	-30.86%	―	-5.32%	36.28%
TRD	48 Neutral	£50.87M	63.76	20.93%	2.05%	26.44%	―

Redcentric Corporate Events

Redcentric Announces Exercise of Employee Share Options

Redcentric plc announced the exercise of employee share options, resulting in the transfer of 18,023 ordinary shares from Treasury. This adjustment affects the company’s issued share capital, now consisting of 158,948,232 voting shares, which stakeholders should consider for reporting under the FCA’s Disclosure Guidance and Transparency Rules.

Spark’s Take on GB:RCN Stock

According to Spark, TipRanks’ AI Analyst, GB:RCN is a Neutral.

Redcentric’s overall stock score reflects strong revenue growth but is dampened by profitability challenges and high leverage. The technical analysis indicates neutral momentum, while the valuation suggests the stock is overvalued. Positive corporate events, such as increased stake by a major investor, provide a boost in confidence. Addressing profitability and financial leverage are crucial for improving the stock’s outlook.

To see Spark’s full report on GB:RCN stock, click here.

Redcentric CEO Designate Steps Down; Continuity Ensured

Redcentric plc announced that CEO designate Brian Woodford has stepped down for personal reasons, with current CEO Peter Brotherton continuing in his role to ensure strategic continuity. The company expressed gratitude for Woodford’s contributions and highlighted its strong leadership team, positioning it well for future growth.

Redcentric Announces Exercise of Employee Share Options

Redcentric plc has announced the exercise of employee share options, resulting in the transfer of 26,471 shares from Treasury to satisfy the exercise. This adjustment affects the company’s issued share capital, which now consists of 158,930,209 Ordinary Shares for voting purposes, impacting shareholder reporting under FCA’s rules.

Redcentric Announces Exercise of Employee Share Options

Redcentric plc has announced the exercise of employee share options, resulting in the transfer of 9,011 shares from Treasury to satisfy this exercise. This adjustment affects the company’s issued share capital, which now consists of 159,145,913 ordinary shares, with 158,903,738 being the issued voting share capital. This change is relevant for shareholders in determining their interest in the company under the FCA’s Disclosure Guidance and Transparency Rules.

Lombard Odier Increases Stake in Redcentric PLC

Lombard Odier Asset Management (Europe) Limited has increased its voting rights in Redcentric PLC to 18.17%, a rise from the previous 17.31%. This acquisition of voting rights may impact Redcentric’s strategic decisions and could influence stakeholder interests, reflecting a significant investment and confidence in the company’s future direction.

Redcentric Announces Exercise of Share Options

Redcentric plc has announced the exercise of employee share options concerning 3,604 ordinary shares as part of its Save As You Earn Option Plan 2014. This development slightly adjusts the company’s share capital, with 159,145,913 ordinary shares in circulation and 251,186 held in Treasury, impacting how shareholders calculate their interest in the company.

Redcentric Adjusts Share Capital Following Employee Options Exercise

Redcentric plc has announced the exercise of employee share options, resulting in the issuance of 47,279 ordinary shares from treasury stock. This adjustment impacts the company’s issued share capital, which now stands at 159,145,913 ordinary shares, with 158,891,123 shares constituting the voting share capital. This move could potentially influence shareholder interests and the company’s market positioning in the IT managed services sector.

Redcentric PLC Sees Increase in Major Holdings by Lombard Odier

Redcentric PLC has announced a change in its major holdings, with Lombard Odier Asset Management (Europe) Limited increasing its voting rights in the company to 17.31%, up from a previous 16.04%. This adjustment in holdings may have implications for the company’s governance and strategic direction, reflecting stakeholder confidence and potentially influencing future business decisions.

Redcentric Announces Employee Share Option Exercise

Redcentric plc announced the exercise of employee share options resulting in the transfer of 248,632 ordinary shares from Treasury to active circulation. The company’s issued share capital now consists of 159,145,913 Ordinary Shares, with 302,069 remaining in Treasury, impacting shareholder reporting under FCA rules by highlighting the importance of excluding Treasury-held shares when determining voting share capital.