QinetiQ (GB:QQ)
LSE:QQ
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QinetiQ
(LSE:QQ)
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Rating:68Neutral
Price Target:
477.00 p
▼(-1.53% Downside)
Action:Reiterated
Date:05/28/26
The score is driven mainly by solid cash generation and a constructive earnings-call outlook supported by a significantly stronger backlog and clear cash/shareholder-return targets. Offsetting these positives are recent revenue and profitability volatility, rising leverage versus earlier years, and only middling valuation support; technicals are favorable but look somewhat extended near-term.
Positive Factors
Strong cash generation and improving free cash flow
Consistent positive operating cash flow and a large YoY FCF improvement signal durable cash conversion capability. This underpins the company's ability to self-fund capital spending, sustain dividends and buybacks, and absorb project timing volatility without immediate reliance on external financing.
Negative Factors
Pronounced revenue volatility and recent sharp contraction
A severe recent decline and historically uneven top-line growth reduce predictability of future earnings. Dependency on large contract timing, strategic exits and one-off effects means revenue can move materially year-to-year, complicating planning and making medium-term targets harder to rely on without continued order momentum.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong cash generation and improving free cash flow
Consistent positive operating cash flow and a large YoY FCF improvement signal durable cash conversion capability. This underpins the company's ability to self-fund capital spending, sustain dividends and buybacks, and absorb project timing volatility without immediate reliance on external financing.
Read all positive factors
QinetiQ (QQ) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£2.26B
Dividend Yield2%
Average Volume (3M)1.20M
Price to Earnings (P/E)21.4
Beta (1Y)1.06
Revenue Growth-0.47%
EPS GrowthN/A
CountryUK
Employees8,500
SectorIndustrials
Sector Strength72
IndustryAerospace & Defense
Share Statistics
EPS (TTM)0.20
Shares Outstanding518,691,200
10 Day Avg. Volume1,056,778
30 Day Avg. Volume1,195,703
Financial Highlights & Ratios
PEG Ratio-0.14
Price to Book (P/B)4.40
Price to Sales (P/S)1.26
P/FCF Ratio14.12
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£536.25Price Target Upside10.70% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)0.34
Revenue Forecast (FY)£2.00B
QinetiQ Business Overview & Revenue Model
Company Description
QinetiQ Group plc operates as a prominent science and engineering enterprise, primarily serving the defense, security, and infrastructure sectors across the United States, Australia, Europe, and other international markets. The company is structur...
How the Company Makes Money
QinetiQ makes money primarily by delivering contracted services and technology solutions to defence and security customers, with government defence departments as major buyers. Its revenue model is largely project- and contract-based: customers pa...
QinetiQ Earnings Call Summary
Earnings Call Date:May 21, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Nov 12, 2026
Earnings Call Sentiment Positive
The call presents a broadly positive picture: management delivered a resilient year with restored margins, record order intake and significantly stronger cash generation, and set clear medium-term cash and return targets. These positives are tempered by identifiable headwinds — most notably a challenging U.S. market, some contract losses and one‑off restructuring/exceptional cash effects — and guidance upside depends on budget clarity and award timing. On balance the highlights materially outweigh the lowlights, reflecting a constructive outlook supported by a larger, higher-quality backlog and strengthened capital allocation.Positive Updates
Resilient full-year financial performance
Revenue just over GBP 1.9 billion; operating profit GBP 218 million (up 18% year-on-year); operating margin 11.3% (return to upper-quartile levels); EPS 31.5p (up 21%); free cash flow GBP 159 million (up c.41%); cash conversion 100%; return on capital employed 34%; net debt GBP 159 million with leverage 0.5x.
Negative Updates
Challenging U.S. market and U.S. business under review
U.S. defense services market impacted by budgetary pressures, shift to platform/hardware, slower contract awards and margin compression; U.S. revenue approximately $385 million. Management completed disposals and exits (Fed IT disposed) and significant cost/headcount reductions, and is actively assessing all options for the U.S. business to enhance shareholder value.
Read all updates
Q4-2026 Updates
Positive
Negative
Resilient full-year financial performance
Revenue just over GBP 1.9 billion; operating profit GBP 218 million (up 18% year-on-year); operating margin 11.3% (return to upper-quartile levels); EPS 31.5p (up 21%); free cash flow GBP 159 million (up c.41%); cash conversion 100%; return on capital employed 34%; net debt GBP 159 million with leverage 0.5x.
Read all positive updates
Company Guidance
QinetiQ guided to FY‑27 revenue growth of 3–5% (higher end dependent on budget clarity), underlying margin of 11–11.5%, and cash conversion greater than 90%, while introducing a three‑year free cash flow target of >£550m (FY‑27 to FY‑29); they expect EPS to grow 8–10%, will move to a 35–40% dividend payout ratio (FY‑26 dividend 11p, +24%), have extended a £200m share buyback through to 2029 (~£100m p.a.) and expect to return roughly £0.5bn to shareholders over three years — all supported by a £4.8bn backlog (+41%), £3.6bn order intake, book‑to‑bill of 1.14, contracted revenue cover of 67%, year‑end net debt £159m (leverage 0.5x), ROCE guidance 25–30%, and FY‑26 capex of £72m.QinetiQ Financial Statement Overview
Summary
Income Statement
56
Neutral
Balance Sheet
62
Positive
Cash Flow
71
Positive
| Breakdown | Mar 2026 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.92B | 1.93B | 1.91B | 1.58B | 1.32B |
| Gross Profit | 546.00M | 1.93B | 268.70M | 480.50M | 416.40M |
| EBITDA | 313.00M | 26.20M | 292.90M | 226.70M | 176.60M |
| Net Income | 107.50M | -185.70M | 139.60M | 154.40M | 90.00M |
Balance Sheet | |||||
| Total Assets | 1.74B | 1.83B | 2.11B | 2.10B | 1.79B |
| Cash, Cash Equivalents and Short-Term Investments | 259.20M | 290.60M | 231.00M | 155.60M | 248.30M |
| Total Debt | 410.30M | 428.90M | 391.80M | 368.90M | 22.10M |
| Total Liabilities | 1.19B | 1.20B | 1.18B | 1.13B | 746.70M |
| Stockholders Equity | 553.00M | 626.50M | 926.10M | 968.30M | 1.04B |
Cash Flow | |||||
| Free Cash Flow | 172.20M | 112.50M | 146.80M | 97.00M | 106.40M |
| Operating Cash Flow | 231.80M | 221.30M | 243.10M | 206.00M | 190.70M |
| Investing Cash Flow | -54.60M | 400.00K | -99.10M | -464.40M | -83.60M |
| Financing Cash Flow | -208.20M | -158.40M | -63.20M | 159.70M | -50.40M |
QinetiQ Technical Analysis
Negative
484.40
Price Trends
458.30
Negative
476.12
Negative
473.89
Negative
Market Momentum
-1.82
Positive
39.59
Neutral
11.29
Positive
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 484.4 is above the 20-day moving average (MA) of 472.41, above the 50-day MA of 458.30, and above the 200-day MA of 473.89, indicating a bearish trend. The MACD of -1.82 indicates Positive momentum. The RSI at 39.59 is Neutral, neither overbought nor oversold. The STOCH value of 11.29 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:QQ.
QinetiQ 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% | |
63 Neutral | £1.32B | 39.06 | 13.12% | 1.64% | -3.99% | -22.35% | |
58 Neutral | £513.86M | 37.17 | 9.32% | 1.02% | 4.62% | 170.53% | |
41 Neutral | £38.59M | -14.00 | 192.83% | ― | ― | ― |
* Industrials Sector Average
GB:QQ
QinetiQ
438.00
-43.38
-9.01%
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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.