QinetiQ (QQ) AI Stock Analysis

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QinetiQ

(LSE:QQ)

Select Model

Neutral 56 (OpenAI - 4o)

Rating:56Neutral

Price Target:

496.00p

▼(-7.12% Downside)

QinetiQ's overall stock score is primarily influenced by its strong financial performance in terms of revenue growth and cash flow management. However, recent profitability challenges and a negative P/E ratio weigh heavily on its valuation score. Technical indicators suggest a lack of strong momentum, further impacting the overall score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong demand for QinetiQ's products and services, enhancing its market position and long-term financial stability.

Cash Flow Management

Strong cash flow management provides financial flexibility and a buffer against income volatility, supporting sustainable business operations.

Industry Position

A strong industry position allows QinetiQ to leverage its expertise and partnerships, driving growth and competitive advantage in the defense sector.

Negative Factors

Profitability Challenges

Negative margins suggest operational inefficiencies or increased costs, which could hinder long-term profitability if not addressed.

Increasing Debt Levels

Rising debt levels may strain financial resources and limit the company's ability to invest in growth opportunities, impacting future stability.

Declining Equity Ratio

A declining equity ratio can weaken financial stability, necessitating improved financial management to maintain investor confidence and operational resilience.

QinetiQ (QQ) vs. iShares MSCI United Kingdom ETF (EWC)

Market Cap

£2.86B

Dividend Yield1.66%

Average Volume (3M)1.05M

Price to Earnings (P/E)18.0

Beta (1Y)0.57

Revenue Growth1.02%

EPS Growth-240.44%

CountryUK

Employees8,500

SectorIndustrials

Sector Strength72

IndustryAerospace & Defense

Share Statistics

EPS (TTM)0.11

Shares Outstanding538,573,360

10 Day Avg. Volume1,173,318

30 Day Avg. Volume1,049,282

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

£543.75

Price Target Upside1.83% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

QinetiQ Business Overview & Revenue Model

Company DescriptionQinetiQ 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 MoneyQinetiQ generates revenue through a combination of government contracts, commercial projects, and consultancy services. A significant portion of its income comes from long-term contracts with defense ministries and security agencies, particularly in the UK and US. The company also engages in research and development projects funded by government grants and collaborations with private sector partners. Key revenue streams include the sale of advanced technology systems, maintenance of defense equipment, and cyber security services. Partnerships with major defense contractors and technology firms further enhance QinetiQ's capabilities and market reach, contributing positively to its financial performance.

QinetiQ Earnings Call Summary

Earnings Call Date:May 22, 2025

(Q2-2025)

% Change Since: |

Next Earnings Date:Nov 13, 2025

Earnings Call Sentiment Positive

The earnings call presented a strong financial and operational performance with significant contract wins and a strategic expansion into the U.S. market. While political changes and mixed segmental performance posed some challenges, the company has planned for these within its guidance. The company's robust order backlog and positive cash flow position it well for future growth.

Q2-2025 Updates

Positive Updates

Strong First Half Performance

Delivered consistent operational and financial performance with revenue up 7%, operating profit up 7%, and a stable margin of 11.3%.

Significant Contract Wins

Secured more than GBP 1 billion of orders with a book-to-bill ratio of 1.3, including a 10-year EUR 284 million contract for Aerial Training Services in Germany.

Positive Cash Flow and Shareholder Returns

Achieved 84% cash conversion and announced an extension of the GBP 100 million share buyback program by a further GBP 50 million, along with a 7% dividend growth.

Global Expansion and Strategic Wins

Entered the U.S. market as a prime contractor with significant wins such as the Aerial Target Systems contract from the U.S. Army.

Robust Order Backlog and Pipeline

Closed the period with a robust funded order backlog of GBP 2.9 billion, with an additional U.S. unfunded backlog of GBP 0.6 billion, providing excellent visibility for future growth.

Negative Updates

Impact of Political Changes

Experienced temporary slowdown in the U.K. due to the transition between governments, although it was planned for within guidance.

Mixed Performance Across Segments

While EMEA Services delivered expected margins, there was a mix shift in U.S. operations with changes in the customer base post-Avantus acquisition.

One-off Accounting Loss

Expected to recognize a noncash accounting loss of approximately GBP 30 million due to the sale and leaseback of the Farnborough site.

Company Guidance

During the call, the company provided guidance for its FY '27 targets, projecting GBP 2.4 billion in organic revenue with an approximately 12% operating margin. The first half of FY '25 showed a 7% increase in operating profit with a stable margin of 11.3%, supported by strong program execution. The company secured over GBP 1 billion in orders, achieving a book-to-bill ratio of 1.3, and reported an 8% revenue increase on an organic constant currency basis. Cash conversion was strong at 84%, with leverage at 0.6x excluding the sale of Cody Technology Park. The balance sheet's strength enabled an extension of the GBP 100 million share buyback program by an additional GBP 50 million. The company maintained its 7% dividend growth, highlighting its commitment to shareholder returns. The strategic outlook remains positive, with a robust order backlog and pipeline valued at over GBP 15 billion, ensuring long-term sustainable growth.

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

Neutral

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

Positive

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

Positive

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	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	1.93B	1.93B	1.91B	1.58B	1.32B	1.28B
Gross Profit	261.90M	1.93B	268.70M	480.50M	416.40M	431.80M
EBITDA	289.90M	26.20M	292.90M	226.70M	176.60M	205.60M
Net Income	-185.70M	-185.70M	139.60M	154.40M	90.00M	121.70M
Balance Sheet
Total Assets	1.83B	1.83B	2.11B	2.10B	1.79B	1.50B
Cash, Cash Equivalents and Short-Term Investments	290.60M	290.60M	231.00M	155.60M	248.30M	190.60M
Total Debt	428.90M	428.90M	391.80M	368.90M	22.10M	26.70M
Total Liabilities	1.20B	1.20B	1.18B	1.13B	746.70M	611.60M
Stockholders Equity	626.50M	626.50M	926.10M	968.30M	1.04B	884.60M
Cash Flow
Free Cash Flow	125.20M	112.50M	146.80M	97.00M	106.40M	102.10M
Operating Cash Flow	221.30M	221.30M	243.10M	206.00M	190.70M	178.00M
Investing Cash Flow	400.00K	400.00K	-99.10M	-464.40M	-83.60M	-49.60M
Financing Cash Flow	-158.40M	-158.40M	-63.20M	159.70M	-50.40M	-55.60M

QinetiQ Technical Analysis

Technical Analysis Sentiment

Positive

Last Price534.00

Price Trends

50DMA

493.86

Positive

100DMA

488.61

Positive

200DMA

443.57

Positive

Market Momentum

MACD

11.18

Negative

RSI

70.21

Negative

STOCH

75.70

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:QQ, the sentiment is Positive. The current price of 534 is above the 20-day moving average (MA) of 500.87, above the 50-day MA of 493.86, and above the 200-day MA of 443.57, indicating a bullish trend. The MACD of 11.18 indicates Negative momentum. The RSI at 70.21 is Negative, neither overbought nor oversold. The STOCH value of 75.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:QQ.

QinetiQ Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AVG	72 Outperform	£155.52M	23.71	―	0.86%	14.49%	76.33%
CHRT	72 Outperform	£617.76M	30.04	12.14%	1.20%	33.33%	19.01%
CHG	71 Outperform	£1.51B	38.88	11.09%	1.40%	8.00%	674.47%
BA	70 Outperform	£58.80B	30.58	16.84%	1.64%	11.60%	8.03%
AVON	69 Neutral	£604.46M	119.21	1.80%	0.91%	14.69%	―
QQ	56 Neutral	£2.86B	17.97	-23.92%	1.66%	1.02%	-240.44%
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

* Industrials Sector Average

Performance Comparison

GB:QQ

QinetiQ

534.00

93.02

21.09%

BAESF

BAE Systems

27.80

11.70

72.67%

GB:AVG

Avingtrans

470.00

54.94

13.24%

GB:AVON

Avon Technologies

2,035.00

828.91

68.73%

GB:CHG

Chemring

563.00

202.29

56.08%

GB:CHRT

Cohort plc

1,354.00

416.96

44.50%

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: Sep 05, 2025