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Chemring (GB:CHG)
LSE:CHG
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Chemring (CHG) AI Stock Analysis

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GB:CHG

Chemring

(LSE:CHG)

Rating:71Outperform
Price Target:
583.00p
▲(7.96% Upside)
Chemring's overall stock score is driven by strong financial performance and positive earnings call highlights, particularly in order growth and strategic investments. However, technical indicators and valuation suggest caution, with potential short-term weakness and a high P/E ratio.
Positive Factors
Contract Wins
Recent contract wins in Roke are encouraging as they signal a recovery in order flow after a period of disruption.
Revenue Growth
The ramp-up of new Energetics capacity and a return to strong growth in Roke contribute to an expected annual EPS growth of over 20%.
Strategic Investments
The acquisition of Landguard Nexus is strategically sensible and provides market opportunities in its own right.
Negative Factors
Business Coverage
Despite recent contract wins, cover for Sensors & Information still appears to be weak.
Market Expectations
The lack of definitive timing and funding details may temper expectations for Chemring.
Revenue Risks
Timely contract awards from the pipeline of electronic warfare product opportunities appear to be the major risk in delivering the revenue target.

Chemring (CHG) vs. iShares MSCI United Kingdom ETF (EWC)

Chemring Business Overview & Revenue Model

Company DescriptionChemring Group PLC supplies countermeasures, sensors, and energetic solutions to aerospace, defense, and security industries in the United States, the United Kingdom, Norway, Australia, and internationally. The company operates through two segments, Sensors & Information and Countermeasures & Energetics. The Sensors & Information segment develops and manufactures explosive hazard detection equipment; chemical and biological threat detection equipment; and electronic countermeasures, as well as network protection technologies. The Countermeasures & Energetics segment offers expendable countermeasures for air, sea, and land platforms; cartridge/propellant actuated devices; pyrotechnic devices for satellite launch and deployment; missile components; separation sub-systems; actuators; and energetic materials, as well as aircrew egress and safety systems. Chemring Group PLC was incorporated in 1905 and is headquartered in Romsey, the United Kingdom.
How the Company Makes MoneyChemring generates revenue primarily through the sale of defense and security products to military and government clients worldwide. Its key revenue streams include sales from its Countermeasures segment, which involves the production of flares and decoys for aircraft, and its Sensors segment, which offers advanced detection and monitoring systems. The company also benefits from long-term contracts with defense ministries and partnerships with key industry players, contributing to stable income. Additionally, Chemring invests in research and development to create cutting-edge technologies, further expanding its market reach and driving revenue growth through innovative product offerings.

Chemring Earnings Call Summary

Earnings Call Date:Jun 03, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Dec 23, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in order intake and robust financial performance, particularly in the Countermeasures & Energetics segment. However, challenges in the Sensors & Information segment and some softness in Roke's performance were noted. The overall market outlook remains positive, driven by increased defense spending and strategic investments.
Q2-2025 Updates
Positive Updates
Record Order Book
The company achieved a record order book of GBP 1.3 billion, marking a 25% increase and the highest in its history.
Strong Performance in Countermeasures & Energetics
Revenue in the Countermeasures & Energetics segment grew by 20%, with operating profit soaring by 73% and margins increasing to 14.4%.
Robust Financial Metrics
Revenue increased by 5%, operating profit by 8%, and EPS by 3%. The group operating margin improved to 11.6% with strong cash conversion at 80%.
Strategic Expansion and Investment
GBP 46 million was invested in operations, primarily in Energetics expansion projects, supported by GBP 13 million in grant funding.
Defense Market Opportunities
Significant opportunities identified in electronic warfare and cybersecurity with a potential pipeline of more than GBP 300 million.
Positive Market Outlook
Global defense spending is expected to rise, with new U.K. and U.S. defense budgets creating opportunities for growth.
Negative Updates
Weak Performance in Sensors & Information
The Sensors & Information segment saw a revenue decline of 12% and an operating profit decrease of 26% due to delays and reduced government spending.
Headwinds in Roke
Roke experienced softness in U.K. order intake due to strategic defense review workload, leading to cost base adjustments.
FX Headwinds
A small foreign exchange headwind was noted, which on a constant currency basis would have resulted in a 6% revenue increase and a 10% operating profit increase.
Company Guidance
During the call, Chemring provided guidance emphasizing robust operational and financial performance, with a record GBP 1.3 billion order book, up 25%, and order intake at GBP 488 million, a 42% increase from last year. Revenue rose by 5%, driven by strong performance in Countermeasures & Energetics, with this segment seeing a 20% revenue increase and a 73% rise in operating profit, raising the margin to 14.4%. The group improved its operating margin to 11.6%, with earnings per share up 3% and a strong cash conversion rate of 80%. The Board declared an interim dividend of 2.7p, a 4% increase. The company maintains its ambition to reach GBP 1 billion in revenue by FY 2030, with a focus on expanding in Energetics, particularly through agreements with Diehl, SAAB, and Northrop Grumman. Despite a weaker period in Sensors & Information, Chemring remains optimistic about long-term growth, supported by strategic investments and acquisitions, while targeting mid-teens margins in the medium term.

Chemring Financial Statement Overview

Summary
Chemring has shown strong financial performance with consistent revenue growth and robust profit margins. The balance sheet is stable with manageable debt levels, but cash flow management presents challenges, particularly in free cash flow generation.
Income Statement
85
Very Positive
Chemring has demonstrated strong financial performance with consistent revenue growth, evidenced by a 7.99% increase from 2023 to 2024. Gross profit margins remain robust at 100% due to the nature of the data. The EBIT margin improved to 11.38%, and the EBITDA margin to 16.20%, reflecting efficient operational management. However, the net profit margin of 7.74% suggests room for optimizing expenses or cost management.
Balance Sheet
78
Positive
The company's balance sheet shows a stable financial position with an improved debt-to-equity ratio of 0.27, indicating manageable leverage levels. The equity ratio stands at 51.47%, showing a solid equity base. Return on equity (ROE) is decent at 11.08%, though slightly lower than the previous year, suggesting potential areas for enhancing shareholder returns.
Cash Flow
70
Positive
Chemring's cash flow performance highlights some challenges, with a significant decrease in free cash flow from 2023 to 2024. The operating cash flow to net income ratio is strong at 2.05, indicating good cash generation relative to profits. However, the free cash flow to net income ratio of 0.29 suggests that capital expenditures might be impacting free cash flow generation.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue510.40M472.60M442.80M393.30M402.50M
Gross Profit510.40M472.60M442.80M393.30M402.50M
EBITDA82.70M67.10M71.20M75.50M75.10M
Net Income39.50M5.40M47.40M41.50M34.70M
Balance Sheet
Total Assets692.10M596.40M620.10M531.50M541.40M
Cash, Cash Equivalents and Short-Term Investments45.00M6.40M19.80M5.80M14.70M
Total Debt97.70M20.70M26.90M32.30M62.80M
Total Liabilities335.80M217.90M202.00M178.70M211.80M
Stockholders Equity356.30M378.50M418.10M352.80M329.60M
Cash Flow
Free Cash Flow11.40M31.70M46.00M45.50M35.10M
Operating Cash Flow81.00M65.90M80.50M75.70M75.90M
Investing Cash Flow-47.60M-39.40M-30.50M-34.90M-25.40M
Financing Cash Flow-37.30M-40.20M-35.80M-50.40M-32.10M

Chemring Technical Analysis

Technical Analysis Sentiment
Positive
Last Price540.00
Price Trends
50DMA
545.04
Negative
100DMA
506.92
Positive
200DMA
427.01
Positive
Market Momentum
MACD
-0.29
Negative
RSI
50.15
Neutral
STOCH
58.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:CHG, the sentiment is Positive. The current price of 540 is above the 20-day moving average (MA) of 537.31, below the 50-day MA of 545.04, and above the 200-day MA of 427.01, indicating a neutral trend. The MACD of -0.29 indicates Negative momentum. The RSI at 50.15 is Neutral, neither overbought nor oversold. The STOCH value of 58.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:CHG.

Chemring Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
£1.45B37.5011.62%1.46%8.00%674.47%
64
Neutral
$10.73B15.747.64%2.01%2.76%-15.10%
$69.26B28.3617.59%2.94%
77
Outperform
£2.18B45.375.21%1.58%0.84%-62.73%
66
Neutral
£606.34M28.9814.40%1.31%33.33%19.01%
65
Neutral
£572.67M113.184.18%0.97%14.69%
56
Neutral
£2.58B17.97-23.92%1.85%1.02%-240.44%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:CHG
Chemring
540.00
161.62
42.71%
BAESF
BAE Systems
24.17
7.61
45.95%
GB:AVON
Avon Technologies
1,918.00
721.80
60.34%
GB:CHRT
Cohort plc
1,242.00
395.71
46.76%
GB:SRP
Serco Group plc
222.60
55.42
33.15%
GB:QQ
QinetiQ
478.00
40.56
9.27%

Chemring Corporate Events

Delistings and Listing ChangesBusiness Operations and Strategy
Chemring Group Expands Market Presence with New Share Listing
Positive
Aug 12, 2025

Chemring Group PLC has applied for a blocklisting of 445,049 ordinary shares to be admitted to the London Stock Exchange. This move, linked to the exercise of employee share options under the Chemring Group 2018 UK Sharesave Plan, is expected to enhance the company’s market presence and provide liquidity options for its stakeholders.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £670.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

Regulatory Filings and Compliance
Chemring Group PLC Updates on Capital Structure and Voting Rights
Neutral
Jul 1, 2025

Chemring Group PLC announced its current capital structure, consisting of 272,208,518 ordinary shares with voting rights and 62,500 cumulative preference shares without voting rights, except in specific situations. This information is crucial for shareholders to determine their reporting obligations under the FCA’s Disclosure and Transparency Rules, potentially impacting shareholder engagement and compliance requirements.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £670.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

M&A TransactionsBusiness Operations and Strategy
Chemring Acquires Landguard to Boost Roke Business
Positive
Jun 30, 2025

Chemring Group PLC has announced the acquisition of Landguard Nexus Limited and its subsidiaries, aiming to enhance the growth of its Roke business. This acquisition, valued at up to £20 million, will integrate Landguard’s software-defined radio systems and security products into Chemring’s portfolio, strengthening its position in the defense, national security, and law enforcement markets. The acquisition is expected to bring operational synergies and expand Chemring’s international sales pipeline, while being marginally earnings enhancing by 2026.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £670.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

Product-Related AnnouncementsBusiness Operations and Strategy
Chemring Advances Norwegian Explosives Facility Study to Second Phase
Positive
Jun 26, 2025

Chemring Group PLC has announced that its joint feasibility study with the Norwegian Government, aimed at assessing a new production facility for military explosives, will progress to its second phase. This development underscores the critical need to expand capacity in the European defense industrial base and aligns with Chemring’s strategy of growth through organic investment and acquisitions in key defense and national security markets.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £670.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

Delistings and Listing ChangesBusiness Operations and Strategy
Chemring Completes Sharesave Plan Share Issuance
Neutral
Jun 18, 2025

Chemring Group PLC announced that following the exercise or lapse of all options under its 2018 UK Sharesave Plan, there are no remaining 1p Ordinary Shares to be issued from the initial block listing of 579,888 shares. This update signifies the completion of the share issuance process related to the plan, potentially impacting the company’s share distribution strategy and stakeholder equity interests.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £670.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

Stock Buyback
Chemring Group PLC Executes Share Buyback
Positive
Jun 4, 2025

Chemring Group PLC, a company involved in the defense and security industry, has announced the repurchase of 59,852 of its ordinary shares at a weighted average price of 490.8067 pence per share. This transaction is part of a buyback program initiated earlier in the year, with the intent to cancel the purchased shares, potentially enhancing shareholder value and optimizing the capital structure.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £460.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
Chemring Reports Record Order Book and Strong Growth Prospects
Positive
Jun 3, 2025

Chemring Group PLC announced its interim results for the six months ending April 30, 2025, reporting a record order book and order intake, with revenue growth driven by strong performance in its Countermeasures & Energetics segment. The company’s financial performance aligns with board expectations, maintaining strong long-term growth prospects due to robust customer demand and a high-quality pipeline of growth opportunities. Despite an increase in net debt due to capital expenditure, Chemring remains well-positioned to capitalize on increased defense spending, particularly across NATO, aiming to achieve £1bn in revenue by 2030.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £460.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

Executive/Board Changes
Chemring Appoints Pete Raby as Non-Executive Director
Positive
Jun 3, 2025

Chemring Group PLC has announced the appointment of Pete Raby as an independent non-executive director, effective from September 1, 2025. Raby, who is currently the CEO of Morgan Advanced Materials plc, brings a wealth of experience in global technology and manufacturing operations, having led significant transformations at Morgan. His appointment is expected to contribute to Chemring’s continued development and performance, enhancing its strategic positioning in the industry.

The most recent analyst rating on (GB:CHG) stock is a Buy with a £460.00 price target. To see the full list of analyst forecasts on Chemring stock, see the GB:CHG Stock Forecast page.

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.Date of analysis: Aug 23, 2025