Latest news with #SNR
Yahoo
19-05-2025
- Business
- Yahoo
An Intrinsic Calculation For Senior plc (LON:SNR) Suggests It's 36% Undervalued
The projected fair value for Senior is UK£2.51 based on 2 Stage Free Cash Flow to Equity Senior's UK£1.60 share price signals that it might be 36% undervalued The UK£1.88 analyst price target for SNR is 25% less than our estimate of fair value How far off is Senior plc (LON:SNR) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. This will be done using the Discounted Cash Flow (DCF) model. There's really not all that much to it, even though it might appear quite complex. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. We check all companies for important risks. See what we found for Senior in our free report. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. 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, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) UK£17.0m UK£42.1m UK£43.0m UK£52.0m UK£58.7m UK£64.4m UK£69.2m UK£73.3m UK£76.8m UK£80.0m Growth Rate Estimate Source Analyst x1 Analyst x2 Analyst x1 Analyst x1 Est @ 12.87% Est @ 9.70% Est @ 7.48% Est @ 5.92% Est @ 4.84% Est @ 4.08% Present Value (£, Millions) Discounted @ 8.0% UK£15.7 UK£36.1 UK£34.1 UK£38.2 UK£40.0 UK£40.6 UK£40.4 UK£39.6 UK£38.5 UK£37.1 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£360m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.3%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.0%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£80m× (1 + 2.3%) ÷ (8.0%– 2.3%) = UK£1.4b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£1.4b÷ ( 1 + 8.0%)10= UK£667m 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£1.0b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of UK£1.6, the company appears quite undervalued at a 36% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the 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 Senior 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 8.0%, which is based on a levered beta of 1.108. 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 Senior Strength Debt is well covered by cash flow. Weakness Earnings declined over the past year. Interest payments on debt are not well covered. 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. Annual revenue is expected to decline over the next 3 years. 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. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Why is the intrinsic value higher than the current share price? For Senior, we've compiled three further elements you should consider: Financial Health: Does SNR 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 SNR'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. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
20-04-2025
- Business
- Yahoo
1 FTSE 250 stock analysts think could climb 50%
Shares in FTSE 250 manufacturing firm Senior (LSE:SNR) have fallen 25% this year. As a result, the average analyst price target is more than 50% above the current level. Source: TradingView I'm sceptical of the idea the stock is set for a big recovery in the near future. But I do think there's a lot to like about the underlying business – and investors should take note. Senior is a specialist in fluid conveyance and thermal management (FCTM). In other words, it makes pipes and tubes that liquids flow through and systems that keep machines cool. At the moment, around two-thirds of the firm's revenues come from its aerospace division. This is a heavily regulated industry, which creates a high barrier to entry for competitors. The trouble with this, however, is that the industry is a duopoly. And when Boeing and Airbus get into difficulties – as they have done recently – there isn't really anyone else to sell to. As a result, 2024 was a difficult year for the company. Revenue growth was only 1% and earnings per share were down 30%, which highlights the risks with the business. There isn't much Senior can do to sort out Boeing's ongoing problems. But it is making moves to put itself in a better position going forward. The firm is selling off its aerostructures business (which makes structural parts for planes) to focus on its core FTCM strengths. This will change the company in a number of ways. First, it should lead to higher profits – the aerostructures unit makes up around 28% of total revenues but made a loss in 2024. Divesting this should significantly boost margins. Second, it will mean Senior's aerospace division only makes up around 50% of its revenues. This should reduce the overall risk that comes from depending on a couple of key customers. Given the ongoing difficulties at Boeing, I'm not convinced Senior's share price is set to climb 50% in the next year. But management have set some very ambitious targets for themselves. The firm is targeting 5% annual organic revenue growth, operating margins of 15%, and a return on capital employed of between 15% and 20%. That's almost unrecognisable from 2024. 2024 Medium-term target Revenue growth 1% 5% Operating margin 4.80% 15% Return on capital employed 6.80% 15%-20% Whether or not the company can hit these targets remains to be seen. But if it can, I think the current share price is a clear bargain. Officially, the stock trades at a price-to-earnings (P/E) multiple of 20, but that's based on 2024's profits, which were unusually weak. As things normalise, I expect this ratio to contract sharply. Warren Buffett says that the key to investing well is being greedy when others are fearful. It can be hard to know when there's fear around, but I think Senior is one of the easier cases. The firm has been going through an unusually difficult time, but investors with a long-term focus should be able to look beyond this. And there could be a lot to be optimistic about. I'm considering adding the stock to my portfolio because divesting its aerostructures business could be transformational. As a result, I'm rather hoping it doesn't climb 50% any time soon. The post 1 FTSE 250 stock analysts think could climb 50% appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Senior Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Motley Fool UK 2025 Sign in to access your portfolio
Yahoo
31-03-2025
- Business
- Yahoo
Declining Stock and Decent Financials: Is The Market Wrong About Senior plc (LON:SNR)?
It is hard to get excited after looking at Senior's (LON:SNR) recent performance, when its stock has declined 5.1% over the past month. However, stock prices are usually driven by a company's financials over the long term, which in this case look pretty respectable. Specifically, we decided to study Senior's ROE in this article. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors' money. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. The end of cancer? These 15 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's. The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Senior is: 5.5% = UK£26m ÷ UK£470m (Based on the trailing twelve months to December 2024). The 'return' refers to a company's earnings over the last year. So, this means that for every £1 of its shareholder's investments, the company generates a profit of £0.06. View our latest analysis for Senior Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company's earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. On the face of it, Senior's ROE is not much to talk about. Next, when compared to the average industry ROE of 17%, the company's ROE leaves us feeling even less enthusiastic. In spite of this, Senior was able to grow its net income considerably, at a rate of 58% in the last five years. So, there might be other aspects that are positively influencing the company's earnings growth. Such as - high earnings retention or an efficient management in place. As a next step, we compared Senior's net income growth with the industry, and pleasingly, we found that the growth seen by the company is higher than the average industry growth of 14%. Earnings growth is a huge factor in stock valuation. It's important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. What is SNR worth today? The intrinsic value infographic in our free research report helps visualize whether SNR is currently mispriced by the market. Senior has a three-year median payout ratio of 31% (where it is retaining 69% of its income) which is not too low or not too high. This suggests that its dividend is well covered, and given the high growth we discussed above, it looks like Senior is reinvesting its earnings efficiently. Besides, Senior has been paying dividends for at least ten years or more. This shows that the company is committed to sharing profits with its shareholders. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 33% of its profits over the next three years. Still, forecasts suggest that Senior's future ROE will rise to 11% even though the the company's payout ratio is not expected to change by much. Overall, we feel that Senior certainly does have some positive factors to consider. With a high rate of reinvestment, albeit at a low ROE, the company has managed to see a considerable growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. 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
Associated Press
07-02-2025
- Business
- Associated Press
SIERRA NORTHERN RAILWAY ACQUIRES THE ASSETS OF RAILPOWER LLC A GROUNDBREAKING STEP TOWARD REVOLUTIONIZING RAIL TRANSPORTATION WITH CLEAN ENERGY SOLUTIONS
WEST SACRAMENTO, Calif., Feb. 7, 2025 /PRNewswire/ -- Sierra Northern Railway (SNR), a division of Sierra Railroad Company, has announced its acquisition of the assets of RailPower LLC, a groundbreaking step toward revolutionizing rail transportation with clean energy solutions. SNR, already a leader in hydrogen-fueled locomotive technology and the owner of the largest RailPower locomotive fleet in America, is poised to integrate RailPower's hybrid innovations with its hydrogen expertise. RailPower has a strong legacy, having produced approximately 190 locomotives, including 55 GG20B hybrid switchers, 116 RP20BD genset locomotives, and other models like the GG10B, GK10B, RP14BD, and RP20SD. These locomotives are recognized for their fuel efficiency and low emissions, serving industrial switching, short-line railroads, and port operations across North America. SNR plans to build its hydrogen locomotives on RailPower's proven platform, initially targeting the 260 locomotives used by shortline railroads in California. This initiative combines the strengths of both companies to offer cutting-edge, zero-emission rail solutions tailored to industry needs. The development of SNR's first hydrogen locomotives was made possible through key partnerships with the California Energy Commission (CEC) and the California State Transportation Agency (CalSTA). With significant funding and support from these organizations, SNR successfully designed and built its hydrogen locomotive prototypes, demonstrating the feasibility of renewable hydrogen as a clean fuel source for rail operations. This acquisition underscores Sierra Railroad Company's commitment to advancing sustainable transportation technologies while supporting California's ambitious climate goals. By merging RailPower's hybrid expertise with Sierra Northern Railway's hydrogen technology, the company aims to lead the rail industry into a new era of clean, efficient, and innovative rail transport. Sierra Northern Railway (SERA): Sierra Northern Railway is the freight division of privately owned, Sierra Railroad Company. Sierra Railroad Company is also the principal owner of Sierra Energy Corporation, which has developed a proprietary waste- to- clean hydrogen technology: FastOx® gasification. Sierra Northern Railway currently operates approximately 75 miles of track in Northern California and 30 miles in Southern California through the heart of a number of the Golden State's prime industrial areas, serving a wide variety of customers, and interchanging with both BNSF Railway and Union Pacific Railroad.
