Chemring (CHG) AI Stock Analysis

• Market Cap: £1.48B
• Dividend Yield: 143.65%
• Average Volume (3M): 857.63K
• Price to Earnings (P/E): 37.9
• Beta (1Y): 0.67
• Revenue Growth: 8.00%
• EPS Growth: 674.47%
• Country: UK
• Employees: 2,672
• Sector: Industrials
• Sector Strength: 94
• Industry: Aerospace & Defense
• EPS (TTM): 0.07
• Shares Outstanding: 272,208,530
• 10 Day Avg. Volume: 756,566
• 30 Day Avg. Volume: 857,632
• PEG Ratio: 0.04
• Price to Book (P/B): 4.29
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 109.78
• 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: £587.50
• Price Target Upside: 8.20% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 75 Outperform
• Price Target: 626.00p ▲(15.29%Upside)

Chemring's strong financial performance and strategic growth initiatives in high-demand defense segments are key strengths. Technical indicators suggest stable momentum, while valuation metrics indicate potential overvaluation. The earnings call and corporate events reinforce a positive outlook, although cash flow challenges and valuation concerns are notable risks.

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 Growth

The acquisition of Landguard Nexus is strategically sensible and provides market opportunities in its own right.

Negative Factors

Revenue Risk

Timely contract awards from the pipeline of electronic warfare product opportunities appear to be the major risk in delivering the revenue target.

Uncertainty

The lack of definitive timing and funding details may temper expectations for Chemring.

Weak Market Coverage

Despite recent contract wins, cover for Sensors & Information still appears to be weak.

Chemring Business Overview & Revenue Model

Company Description

Chemring 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 Money

Chemring Group PLC generates revenue through the production and sale of its core products: countermeasures, sensors, and energetics. The company's countermeasures division includes products designed to protect military aircraft from radar and infrared-guided threats. Its sensors division offers chemical and biological threat detection systems, as well as electronic warfare and cyber protection technologies. The energetics division provides explosive devices and materials used in munitions and pyrotechnics. Key revenue streams include government contracts, primarily with the United States and United Kingdom defense departments, as well as sales to other NATO and allied countries. Strategic partnerships and long-term supply agreements with military organizations and defense contractors further bolster Chemring's earnings.

Chemring Financial Statement Overview

Summary

Chemring demonstrates strong revenue growth and operational efficiency, with robust profit margins. The balance sheet is stable with manageable leverage and a solid equity base. However, cash flow management is a challenge, with significant capital expenditures impacting free cash flow generation.

Income Statement

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

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

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.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	510.40M	472.60M	442.80M	393.30M	402.50M
Gross Profit	510.40M	472.60M	442.80M	393.30M	402.50M
EBITDA	82.70M	67.10M	71.20M	75.50M	75.10M
Net Income	39.50M	5.40M	47.40M	41.50M	34.70M
Balance Sheet
Total Assets	692.10M	596.40M	620.10M	531.50M	541.40M
Cash, Cash Equivalents and Short-Term Investments	45.00M	6.40M	19.80M	5.80M	14.70M
Total Debt	97.70M	20.70M	26.90M	32.30M	62.80M
Total Liabilities	335.80M	217.90M	202.00M	178.70M	211.80M
Stockholders Equity	356.30M	378.50M	418.10M	352.80M	329.60M
Cash Flow
Free Cash Flow	11.40M	31.70M	46.00M	45.50M	35.10M
Operating Cash Flow	81.00M	65.90M	80.50M	75.70M	75.90M
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: Neutral
• Last Price: 543.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:CHG, the sentiment is Neutral. The current price of 543 is below the 20-day moving average (MA) of 557.75, above the 50-day MA of 534.61, and above the 200-day MA of 401.55, indicating a neutral trend. The MACD of 3.99 indicates Positive momentum. The RSI at 46.39 is Neutral, neither overbought nor oversold. The STOCH value of 34.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:CHG.

Chemring Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHG	75 Outperform	£1.48B	37.91	11.62%	143.65%	8.00%	674.47%
Sector *	58 Neutral	HK$14.94B	4.62	-2.78%	5.07%	3.80%	-54.55%
BAESF	―	$73.15B	30.74	17.85%	0.07%	―	―
CHRT	76 Outperform	£701.49M	34.70	14.40%	99.55%	13.49%	47.00%
SRP	75 Outperform	£2.13B	50.41	4.71%	145.12%	-0.68%	-78.93%
AVON	72 Outperform	£628.22M	123.61	4.18%	88.13%	14.69%	―
QQ	63 Neutral	£2.70B	17.97	-23.92%	176.65%	1.02%	-240.44%

Chemring Corporate Events

Chemring Group PLC Updates on Capital Structure and Voting Rights

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.

Chemring Acquires Landguard to Boost Roke Business

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.

Chemring Advances Norwegian Explosives Facility Study to Second Phase

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.

Chemring Completes Sharesave Plan Share Issuance

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.

Chemring Group PLC Executes Share Buyback

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.

Chemring Reports Record Order Book and Strong Growth Prospects

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.

Chemring Appoints Pete Raby as Non-Executive Director

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.

Chemring Group PLC Announces Capital Structure Update

Chemring Group PLC announced its capital structure as of April 30, 2025, consisting of 272,349,319 ordinary shares with voting rights and 62,500 cumulative preference shares without voting rights. This information is crucial for shareholders to determine their notification requirements under the FCA’s Disclosure and Transparency Rules, impacting how they manage their interests in the company.

Chemring Executes Share Buyback to Boost Shareholder Value

Chemring Group PLC has repurchased 6,260 of its ordinary shares at a weighted average price of 389.9305 pence per share, as part of a buyback program announced earlier in February 2025. The company plans to cancel these shares, which could potentially enhance shareholder value and reflect confidence in its financial health.

Chemring Executes Share Buyback as Part of Ongoing Program

Chemring Group PLC has executed a share buyback, purchasing 18,381 of its ordinary shares at a weighted average price of 387.4813 pence per share. This transaction is part of a previously announced buyback program, and the company plans to cancel the purchased shares, potentially impacting its share capital structure and signaling confidence in its financial position.

Chemring Executes Share Buyback to Enhance Shareholder Value

Chemring Group PLC has executed a share buyback program, purchasing 20,000 of its ordinary shares at a weighted average price of 380.7649 pence per share. This move, part of a previously announced buyback program, is aimed at canceling the purchased shares, potentially enhancing shareholder value by reducing the number of shares in circulation.