Chemring Group PLC (GB:BC88)
LSE:BC88
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Chemring
(LSE:BC88)
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Rating:59Neutral
Price Target:
101.00 p
▲(4.12% Upside)
Action:Reiterated
Date:06/06/26
The score is held back primarily by mixed financial quality (negative free cash flow and rising leverage) and overextended technical signals, partially offset by a strong earnings-call outlook (record order book and improving operating performance) and supportive dividend yield despite a high P/E.
Positive Factors
Record order book and intake
A GBP 1.3bn order book (25% growth) and GBP 488m intake give multi‑year revenue visibility and de‑risk near‑term demand. For a defence supplier, a deep backlog underpins production planning, capacity utilisation and predictable cash flows across program cycles.
Negative Factors
Rising leverage
A marked increase in indebtedness from very low levels raises financial risk if cash generation softens. Higher leverage increases interest and covenant sensitivity, limiting strategic optionality and making the business more vulnerable to slower defense spending or execution setbacks.
Read all positive and negative factors
Positive Factors
Negative Factors
Record order book and intake
A GBP 1.3bn order book (25% growth) and GBP 488m intake give multi‑year revenue visibility and de‑risk near‑term demand. For a defence supplier, a deep backlog underpins production planning, capacity utilisation and predictable cash flows across program cycles.
Read all positive factors
Chemring (BC88) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£1.32B
Dividend Yield7.22%
Average Volume (3M)1.76K
Price to Earnings (P/E)39.1
Beta (1Y)N/A
Revenue GrowthN/A
EPS GrowthN/A
CountryUK
Employees2,786
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.12
Shares Outstanding62,500
10 Day Avg. Volume1,762
30 Day Avg. Volume1,762
Financial Highlights & Ratios
PEG Ratio1.13
Price to Book (P/B)4.06
Price to Sales (P/S)3.12
P/FCF Ratio-277.01
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£580.00Price Target Upside497.94% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Chemring Business Overview & Revenue Model
Company Description
Chemring Group PLC is a prominent company specializing in defense technology, structured around two core operational segments. The first, Sensors and Information, is responsible for designing and manufacturing electronic countermeasures, alongside...
How the Company Makes Money
Chemring makes money primarily by manufacturing and selling defence-related products and delivering contracted services, with revenues largely driven by long-term procurement programs and repeat orders from government customers and prime contracto...
Chemring Earnings Call Summary
Earnings Call Date:Dec 09, 2025
(Q4-2025)
| Next Earnings Date:Dec 15, 2026
Earnings Call Sentiment Positive
The call presented a largely positive operational and financial picture: record order intake and order book, modest revenue growth, expanding margins, exceptional cash conversion and strong Energetics and countermeasures performance underpin medium-term growth. Notable near-term challenges include Roke's decline driven by UK budget timing, a material CapEx increase in Norway (partially grant-funded), higher near-term capital spend and lower cash conversion guidance for FY '26, and some underperforming legacy assets being divested. On balance, the strategic wins, strong balance sheet, and execution evidence outweigh the short-term timing and cost pressures.Positive Updates
Record Order Intake and Order Book
Order intake reached GBP 781 million, up 20% year-on-year, delivering a record order book of GBP 1.3 billion (up 32% YoY), providing strong visibility into future revenue.
Negative Updates
Roke Revenue and Profit Decline
Sensors & Information (Roke) revenue fell 18% to GBP 175 million and operating profit declined 25% due to softness in UK government contracting and delayed order placement; segment operating margin was maintained at ~17.8% through cost actions, but order cover is modest (45% for FY '26).
Read all updates
Q4-2025 Updates
Positive
Negative
Record Order Intake and Order Book
Order intake reached GBP 781 million, up 20% year-on-year, delivering a record order book of GBP 1.3 billion (up 32% YoY), providing strong visibility into future revenue.
Read all positive updates
Company Guidance
Guidance was unchanged for FY26 with c.76% of revenue already covered and a similar H2 weighting to FY25; group targets include Countermeasures & Energetics growth of low double-digits (Energetics mid‑teens, Countermeasures low single‑digits) and Sensors & Information mid‑double‑digit growth, with U.S. Sensors flat as JBTDS waits FRP (expected FY27) and Roke returning to near FY24 revenue with H2‑weighted recovery and a target of GBP250m by FY28; order cover remains strong (95% for ’26, 93% for ’27, 59% for ’28), CapEx for FY26 is guided at GBP100–110m (higher due to Norway), interest costs about GBP10m, cash conversion expected 80–85% in FY26 (returning to normal in the medium term), leverage target remains <1.5x, dividend cover target of 2.5x is being maintained, GBP36m remains on the buyback, and the long‑term ambition is to double revenue to GBP1bn by 2030 while maintaining strong margins.Chemring Financial Statement Overview
Summary
Income Statement
71
Positive
Balance Sheet
58
Neutral
Cash Flow
46
Neutral
| Breakdown | TTM | Oct 2025 | Oct 2024 | Oct 2023 | Oct 2022 | Oct 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 500.50M | 497.50M | 510.40M | 472.60M | 401.00M | 393.30M |
| Gross Profit | 485.30M | 497.50M | 510.40M | 472.60M | 401.00M | 393.30M |
| EBITDA | 95.00M | 100.20M | 82.70M | 67.10M | 71.20M | 75.50M |
| Net Income | 33.90M | 48.20M | 39.50M | 5.40M | 47.40M | 41.50M |
Balance Sheet | ||||||
| Total Assets | 908.10M | 863.10M | 692.10M | 596.40M | 620.10M | 531.50M |
| Cash, Cash Equivalents and Short-Term Investments | 44.70M | 65.30M | 45.00M | 6.40M | 19.80M | 5.80M |
| Total Debt | 189.20M | 154.30M | 97.70M | 20.70M | 26.90M | 32.30M |
| Total Liabilities | 539.40M | 481.10M | 335.80M | 217.90M | 202.00M | 178.70M |
| Stockholders Equity | 368.70M | 382.00M | 356.30M | 378.50M | 418.10M | 352.80M |
Cash Flow | ||||||
| Free Cash Flow | -13.50M | -5.60M | 11.40M | 31.70M | 46.00M | 45.50M |
| Operating Cash Flow | 76.00M | 84.60M | 81.00M | 65.90M | 80.50M | 75.70M |
| Investing Cash Flow | -92.60M | -85.70M | -47.60M | -39.40M | -30.50M | -34.90M |
| Financing Cash Flow | 2.70M | 43.30M | -37.30M | -40.20M | -35.80M | -50.40M |
Chemring Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | £553.11M | 30.01 | 11.27% | 1.58% | 23.91% | -14.66% | |
69 Neutral | £53.97B | 26.78 | 18.23% | 1.99% | 7.69% | 7.29% | |
68 Neutral | £2.26B | 21.36 | 19.34% | 2.00% | -0.47% | ― | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
59 Neutral | £1.32B | 39.06 | 9.03% | 7.22% | ― | ― | |
45 Neutral | £7.93M | -7.24 | -13.02% | ― | -10.02% | -26.58% | |
41 Neutral | £38.59M | -14.00 | 192.83% | ― | ― | ― |
* Industrials Sector Average
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97.00
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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.