Latest news with #ChemringGroup
Business Recorder
3 days ago
- Business
- Business Recorder
London shares edge lower as mining, bank stocks weigh
Britain's main indexes fell on Tuesday, pressured by mining and financial stocks, with investors growing cautious over unpredictable U.S. trade policies, dampening market sentiment. As of 0946 GMT, the blue-chip FTSE 100 was down 0.14%, and the midcap FTSE 250 fell 0.1%. The Organisation for Economic Cooperation and Development (OECD) trimmed its global growth outlook and said the trade war was taking a bigger toll on the U.S. economy than before. The Paris-based organization also urged Britain's government to make stronger efforts to reduce borrowing and debt, just days before Finance Minister Rachel Reeves presents her long-term spending plans. Investors were already unsettled by U.S. President Donald Trump's Friday announcement to increase tariffs on imported steel and aluminum from 25% to 50%. Industrial metal miners bore the brunt of the trade jitters, falling 2.5%, as London copper prices lost ground on concerns of possible U.S. tariffs on the metal. London stocks gain despite lingering US tariff uncertainty Losses in financial stocks also weighed on both the indexes, with an index tracking the UK banks dropping 1.4%. On the flip side, the aerospace and defence sub-index continued to gain for the second consecutive day after Prime Minister Keir Starmer announced on Monday 15 billion pounds ($20.3 billion) in spending to bring Britain up to 'war-fighting readiness'. Chemring Group jumped 6.5% to the top of the midcap index after the defence contractor posted the highest-ever order book for the six months ended April 30. The stock hit a near four-year high. Elsewhere, euro zone inflation eased below the European Central Bank's target last month, underpinning expectations for another interest rate cut this week.
Mint
3 days ago
- Business
- Mint
London shares edge lower as mining, bank stocks weigh
(For a Reuters live blog on U.S., UK and European stock markets, click or type LIVE/ in a news window) FTSE 100 down 0.14%, FTSE 250 falls 0.1% OECD cuts global growth outlook, cites trade war impact UK needs tough action on government budget policy, OECD warns Chemring Group hits near 14-year high Euro zone inflation falls below ECB target June 3 (Reuters) - Britain's main indexes fell on Tuesday, pressured by mining and financial stocks, with investors growing cautious over unpredictable U.S. trade policies, dampening market sentiment. As of 0946 GMT, the blue-chip FTSE 100 was down 0.14%, and the midcap FTSE 250 fell 0.1%. The Organisation for Economic Cooperation and Development (OECD) trimmed its global growth outlook and said the trade war was taking a bigger toll on the U.S. economy than before. The Paris-based organization also urged Britain's government to make stronger efforts to reduce borrowing and debt, just days before Finance Minister Rachel Reeves presents her long-term spending plans. Investors were already unsettled by U.S. President Donald Trump's Friday announcement to increase tariffs on imported steel and aluminum from 25% to 50%. Industrial metal miners bore the brunt of the trade jitters, falling 2.5%, as London copper prices lost ground on concerns of possible U.S. tariffs on the metal. Losses in financial stocks also weighed on both the indexes, with an index tracking the UK banks dropping 1.4%. On the flip side, the aerospace and defence sub-index continued to gain for the second consecutive day after Prime Minister Keir Starmer announced on Monday 15 billion pounds ($20.3 billion) in spending to bring Britain up to "war-fighting readiness". Chemring Group jumped 6.5% to the top of the midcap index after the defence contractor posted the highest-ever order book for the six months ended April 30. The stock hit a near four-year high. Elsewhere, euro zone inflation eased below the European Central Bank's target last month, underpinning expectations for another interest rate cut this week. (Reporting by Ragini Mathur in Bengaluru; Editing by Vijay Kishore)
Yahoo
05-05-2025
- Business
- Yahoo
Are Investors Undervaluing Chemring Group PLC (LON:CHG) By 40%?
Using the 2 Stage Free Cash Flow to Equity, Chemring Group fair value estimate is UK£6.83 Chemring Group's UK£4.12 share price signals that it might be 40% undervalued The UK£4.82 analyst price target for CHG is 29% less than our estimate of fair value In this article we are going to estimate the intrinsic value of Chemring Group PLC (LON:CHG) by estimating the company's future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. We check all companies for important risks. See what we found for Chemring Group in our free report. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, so we discount the value of these future cash flows to their estimated value in today's dollars: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) UK£6.73m UK£32.6m UK£65.8m UK£72.7m UK£81.8m UK£88.6m UK£94.3m UK£99.3m UK£103.6m UK£107.4m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Analyst x1 Est @ 8.28% Est @ 6.49% Est @ 5.23% Est @ 4.35% Est @ 3.74% Present Value (£, Millions) Discounted @ 6.6% UK£6.3 UK£28.7 UK£54.3 UK£56.3 UK£59.5 UK£60.4 UK£60.4 UK£59.6 UK£58.4 UK£56.8 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£501m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.3%. We discount the terminal cash flows to today's value at a cost of equity of 6.6%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£107m× (1 + 2.3%) ÷ (6.6%– 2.3%) = UK£2.6b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£2.6b÷ ( 1 + 6.6%)10= UK£1.4b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is UK£1.9b. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of UK£4.1, the company appears quite undervalued at a 40% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Chemring Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.6%, which is based on a levered beta of 0.834. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Chemring Group Strength Earnings growth over the past year exceeded its 5-year average. Debt is not viewed as a risk. Weakness Earnings growth over the past year underperformed the Aerospace & Defense industry. Dividend is low compared to the top 25% of dividend payers in the Aerospace & Defense market. Opportunity Annual earnings are forecast to grow faster than the British market. Trading below our estimate of fair value by more than 20%. Threat Dividends are not covered by cash flow. Revenue is forecast to grow slower than 20% per year. Although the valuation of a company is important, it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. What is the reason for the share price sitting below the intrinsic value? For Chemring Group, we've put together three relevant items you should explore: Financial Health: Does CHG have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk. Future Earnings: How does CHG's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every British stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Reuters
24-02-2025
- Business
- Reuters
Bain Capital targets London-listed defence firm Chemring, Sky News reports
Feb 24 (Reuters) - U.S. private equity firm Bain Capital has made an approach to buy Chemring Group (CHG.L), opens new tab, Sky News reported on Monday, sending shares of the London-listed defence company up more than 15%.
