QinetiQ (QQ) AI Stock Analysis

• Market Cap: £2.49B
• Dividend Yield: 2%
• Average Volume (3M): 1.20M
• Price to Earnings (P/E): 20.0
• Beta (1Y): 0.74
• Revenue Growth: -4.59%
• EPS Growth: -256.51%
• Country: UK
• Employees: 8,500
• Sector: Industrials
• Sector Strength: 72
• Industry: Aerospace & Defense
• EPS (TTM): 0.13
• Shares Outstanding: 525,358,300
• 10 Day Avg. Volume: 1,056,778
• 30 Day Avg. Volume: 1,195,703
• PEG Ratio: 0.05
• Price to Book (P/B): 3.47
• Price to Sales (P/S): 1.13
• P/FCF Ratio: 19.34
• 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: £545.00
• Price Target Upside: 14.21% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2
• EPS Forecast (FY): 0.31
• Revenue Forecast (FY): £1.93B

• Rating: 58 Neutral
• Price Target: 515.00 p ▲(7.92% Upside)
• Action: Reiterated Date: 11/15/25
• Date: Action: Reiterated 11/15/25

QinetiQ's overall stock score is primarily influenced by its strong financial performance and positive earnings call, which highlight strategic wins and a robust order backlog. However, technical analysis indicates bearish momentum, and valuation concerns due to a negative P/E ratio weigh down the score. The company needs to address operational challenges to improve profitability and investor sentiment.

Positive Factors

Strong Order Backlog

A record GBP 4.8bn backlog provides durable revenue visibility from multi-year, defence-focused contracts. This pipeline supports steady utilization of specialist facilities, reduces short-term top-line volatility, and underpins multi-period planning, bidding leverage and long-term client relationships.

High Cash Conversion

Consistently strong operating cash conversion (85%) and positive free cash flow generation improve resilience to cyclical defence spending. Reliable cash generation funds capex, R&D and shareholder returns while enabling investment in specialised test ranges and through-life support capabilities.

Low Leverage & Capital Discipline

A modest leverage ratio (~0.6x) combined with active dividends and buybacks signals prudent balance sheet management and capital allocation. This financial flexibility supports bidding on large programmes, strategic investments and absorbing delivery timing mismatches without immediate refinancing pressure.

Negative Factors

Organic Revenue Decline

A 3% organic revenue decline highlights exposure to contract timing, programme losses and portfolio disposals. Sustained top-line shrinkage reduces scale advantages, pressures fixed-cost absorption and constrains long-term reinvestment in R&D and specialised facilities if not reversed.

Profitability Pressure

Declines in EBIT and net income that produced negative margins point to structural operational challenges or cost mismatches on certain programmes. Persistent margin weakness would erode ability to self-fund growth, weaken returns on contracts and reduce buffer for contract overruns.

Rising Debt / Falling Equity Ratio

A trend of rising total debt alongside a declining equity ratio indicates deteriorating capital structure over time. Even with moderate current leverage, this trajectory can limit strategic optionality, increase interest exposure, and raise scrutiny from counterparties when bidding for large, long-duration defence contracts.

QinetiQ Business Overview & Revenue Model

Company Description

QinetiQ Group plc operates as a science and engineering company primarily in the defense, security, and infrastructure markets in the United States, Australia, Europe, and internationally. The company operates through EMEA Services and Global Products segments. It offers advanced materials and manufacturing products; artificial intelligence, analytics, and advanced computing technologies; cyber and electromagnetic technologies; human protection and performance systems; novel systems, and weapons and effects; maritime platform, and system design and assessment products; power sources, and energy storage and distribution products; robotics and autonomy services; secure communications and navigation systems; and sensing, processing, and data fusion systems. The company also provides testing and evaluation, training and simulation, and cyber and digital resilience services, as well as unmanned air, land, and surface targets. It serves defense, aviation and aerospace, energy and utility, financial services, government, law enforcement, marine, space, and telecommunications sectors. The company was founded in 2001 and is based in Farnborough, the United Kingdom.

How the Company Makes Money

QinetiQ makes money primarily by delivering contracted services and solutions to defence and security customers, with revenues largely derived from long-term and multi-year contracts. Key revenue streams include: (1) Services and engineering support—fee-based work providing research, systems engineering, technical assurance, training, and operational/mission support; these are typically billed based on time-and-materials, fixed-price milestones, or cost-plus arrangements depending on contract structure. (2) Test, trials, evaluation, and range access—income from using QinetiQ’s specialised facilities, instrumentation, and ranges to test and certify platforms, sensors, munitions, communications, and other defence technologies; this can include recurring facility usage fees and project-based trial programmes. (3) Technology and product-related revenue—sales and support of selected defence technologies and equipment (where applicable), including integration, upgrades, and through-life support tied to delivered systems; revenue may include initial delivery plus follow-on support/maintenance. (4) International and allied-government programmes—earnings from serving non-UK customers (including allied defence departments) through local subsidiaries and programme delivery, often under frameworks or prime/subcontractor roles. Significant factors affecting earnings are government defence spending priorities, contract awards/renewals, delivery performance on large programmes, and the mix between higher-margin specialist services/facility work versus lower-margin pass-through or subcontract-heavy work. Specific partnership details not publicly specified here are null.

QinetiQ Financial Statement Overview

Summary

QinetiQ demonstrates strong revenue growth and effective cash flow management, but recent profitability challenges reflected in negative margins indicate potential operational issues. The balance sheet is stable, yet the trajectory of increasing debt and decreasing equity ratio warrants attention. The company is positioned well within its industry, but the focus should be on improving operational efficiencies to enhance profitability.

Income Statement

The company has shown a significant increase in revenue over the years, with a notable jump from 2022 to 2023. However, the most recent year saw a decline in EBIT and net income, resulting in negative margins. This indicates potential operational challenges or increased costs, impacting profitability.

Balance Sheet

The balance sheet reveals a stable equity base with increasing total debt. Despite the rise in debt, the company maintains a reasonable debt-to-equity ratio due to solid stockholders' equity. However, the declining equity ratio in recent years suggests a need for careful financial management to maintain stability.

Cash Flow

The company's cash flow is robust, with consistent positive operating cash flow and free cash flow generation. The free cash flow growth rate has been variable, but overall cash management appears strong, providing a buffer against potential income statement volatility.

Breakdown	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	1.93B	1.91B	1.58B	1.32B	1.28B
Gross Profit	1.93B	268.70M	480.50M	416.40M	431.80M
EBITDA	26.20M	292.90M	226.70M	176.60M	205.60M
Net Income	-185.70M	139.60M	154.40M	90.00M	121.70M
Balance Sheet
Total Assets	1.83B	2.11B	2.10B	1.79B	1.50B
Cash, Cash Equivalents and Short-Term Investments	290.60M	231.00M	155.60M	248.30M	190.60M
Total Debt	428.90M	391.80M	368.90M	22.10M	26.70M
Total Liabilities	1.20B	1.18B	1.13B	746.70M	611.60M
Stockholders Equity	626.50M	926.10M	968.30M	1.04B	884.60M
Cash Flow
Free Cash Flow	112.50M	146.80M	97.00M	106.40M	102.10M
Operating Cash Flow	221.30M	243.10M	206.00M	190.70M	178.00M
Investing Cash Flow	400.00K	-99.10M	-464.40M	-83.60M	-49.60M
Financing Cash Flow	-158.40M	-63.20M	159.70M	-50.40M	-55.60M

QinetiQ Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 477.20
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:QQ, the sentiment is Negative. The current price of 477.2 is below the 20-day moving average (MA) of 503.75, below the 50-day MA of 503.94, and below the 200-day MA of 482.41, indicating a bearish trend. The MACD of -0.79 indicates Positive momentum. The RSI at 38.50 is Neutral, neither overbought nor oversold. The STOCH value of 21.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:QQ.

QinetiQ Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CHRT	74 Outperform	£570.93M	24.99	11.27%	1.58%	23.91%	-14.66%
BA	71 Outperform	£65.59B	24.91	17.90%	1.99%	11.60%	8.03%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%
CHG	63 Neutral	£1.36B	32.18	13.12%	1.64%	-2.53%	22.25%
QQ	58 Neutral	£2.49B	20.00	―	2.00%	-4.59%	-256.51%
AVON	53 Neutral	£504.95M	79.43	4.62%	1.02%	10.74%	237.07%
ALRT	49 Neutral	£27.21M	-0.12	192.83%	―	―	―