REACT Group plc (REAT) AI Stock Analysis

• Market Cap: £11.46M
• Dividend Yield: N/A
• Average Volume (3M): 28.09K
• Price to Earnings (P/E): 900.0
• Beta (1Y): 0.20
• Revenue Growth: 6.90%
• EPS Growth: -242.86%
• Country: UK
• Employees: 372
• Sector: Industrials
• Sector Strength: 89
• Industry: Specialty Business Services
• EPS (TTM): -0.01
• Shares Outstanding: 23,636,610
• 10 Day Avg. Volume: 40,346
• 30 Day Avg. Volume: 28,089
• PEG Ratio: -6.86
• Price to Book (P/B): 1.36
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.50
• 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: £62.00
• Price Target Upside: 27.84% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 61 Neutral
• Price Target: 56.00p ▲(15.46%Upside)

The stock score reflects strong financial performance but is weighed down by negative valuation metrics and bearish technical indicators. Positive corporate events provide a modest boost to the overall score.

REACT Group plc Business Overview & Revenue Model

Company Description

REACT Group plc (REAT) is a specialist cleaning, hygiene, and decontamination company based in the United Kingdom. The company operates across various sectors, including healthcare, education, transport, retail, and infrastructure. REACT Group provides a wide range of services, including deep cleaning, specialist cleaning for hazardous environments, infection control, and emergency cleaning response, designed to maintain high standards of hygiene and safety.

How the Company Makes Money

REACT Group plc generates revenue through a variety of cleaning and decontamination services offered to diverse sectors. The company's key revenue streams include contracted cleaning services, which provide regular income through long-term agreements with clients in healthcare, education, and other sectors. Additionally, REACT earns from ad-hoc and emergency response services, which are called upon during urgent situations requiring immediate intervention, such as contamination incidents or outbreak controls. The company may also engage in partnerships with facility management firms, enhancing its service offerings and client reach. Factors such as regulatory compliance requirements and heightened awareness of hygiene standards contribute significantly to its business growth and revenue potential.

REACT Group plc Financial Statement Overview

Summary

REACT Group plc exhibits a strong financial trajectory with significant revenue growth and improved operational margins. The balance sheet shows low leverage and robust equity support, though cash flow management shows some volatility.

Income Statement

REACT Group plc has demonstrated strong revenue growth, increasing from £3.1M in 2019 to £20.7M in 2024. Gross profit and net profit margins have improved significantly over time, with the latest figures at 27.6% and 0.1%, respectively. The company has turned around its EBIT from negative figures in 2022 to positive in 2024, indicating enhanced operational efficiency. However, net income remains low, which could be an area for improvement.

Balance Sheet

The balance sheet shows a healthy equity position with a debt-to-equity ratio of 0.09, indicating low leverage and strong equity funding. The equity ratio stands at 62.2%, reflecting a robust asset base funded by equity. Return on equity has improved, although net income remains marginal. The company's financial stability is commendable, though increasing profitability would strengthen the balance sheet further.

Cash Flow

The cash flow statement reflects positive operating cash flow and strong free cash flow, with free cash flow growing significantly over the years. The operating cash flow to net income ratio is high, indicating effective cash generation from operations. However, fluctuations in free cash flow due to varying capital expenditures suggest some volatility in cash management.

Breakdown	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	20.75M	19.58M	13.67M	7.70M	4.36M
Gross Profit	5.72M	5.24M	3.26M	2.37M	1.45M
EBITDA	2.07M	2.06M	410.00K	394.00K	261.00K
Net Income	18.00K	50.00K	-701.00K	389.00K	188.00K
Balance Sheet
Total Assets	13.92M	16.41M	15.68M	6.23M	3.16M
Cash, Cash Equivalents and Short-Term Investments	1.78M	2.12M	979.00K	633.00K	1.78M
Total Debt	784.00K	904.00K	1.08M	170.00K	43.00K
Total Liabilities	5.26M	7.91M	7.34M	3.44M	967.00K
Stockholders Equity	8.66M	8.49M	8.34M	2.79M	2.19M
Cash Flow
Free Cash Flow	2.38M	2.33M	-888.00K	361.00K	237.00K
Operating Cash Flow	2.79M	2.44M	-773.00K	432.00K	281.00K
Investing Cash Flow	-2.42M	-1.42M	-8.41M	-2.19M	-42.00K
Financing Cash Flow	-233.00K	-360.00K	7.00M	228.00K	1.10M

REACT Group plc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 48.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:REAT, the sentiment is Negative. The current price of 48.5 is below the 20-day moving average (MA) of 52.40, below the 50-day MA of 56.81, and below the 200-day MA of 72.46, indicating a bearish trend. The MACD of -2.58 indicates Positive momentum. The RSI at 13.32 is Positive, neither overbought nor oversold. The STOCH value of 24.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:REAT.

REACT Group plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CEPS	73 Outperform	£4.72M	8.15	23.19%	―	6.35%	4.15%
VNET	69 Neutral	£24.27M	28.94	3.15%	1.55%	-1.00%	8.46%
Sector *	67 Neutral	£2.82B	10.48	4.69%	3.54%	2.70%	-19.89%
DSW	61 Neutral	£14.07M	12.90	11.18%	3.07%	-0.95%	―
REAT	61 Neutral	£11.46M	900.00	-3.75%	―	6.90%	-242.86%
CPP	55 Neutral	£14.85M	―	-177.83%	―	-18.97%	―
MIND	48 Neutral	£17.54M	―	-106.45%	―	-14.04%	24.84%

REACT Group plc Corporate Events

REACT Group Launches Employee Share Incentive Plan

REACT Group plc has introduced an HMRC-sanctioned Share Incentive Plan (SIP) aimed at benefiting its employees. Under the SIP, eligible employees can acquire Partnership Shares at market price, with the company offering three Matching Shares for every two Partnership Shares purchased. These Matching Shares have a three-year holding period and may be forfeited if certain conditions are not met. This initiative is likely to enhance employee engagement and retention, potentially strengthening REACT’s position in the facility management industry.

Helium Reduces Stake in REACT Group, Affiliates Remain Supportive

REACT Group plc announced that Helium Rising Stars Fund has reduced its notifiable interest in the company’s voting rights to 2.48% from a previous 5.53%, following a restructuring and reallocation of holdings. Despite the reduction, individuals affiliated with Helium have acquired the shares off-market and remain supportive shareholders, indicating continued confidence in REACT’s operations.

REACT Group Reports Strong First-Half Performance Amid Market Challenges

REACT Group plc reported a strong first-half performance for FY 2025, with a 14% increase in revenue to £12.1 million, driven by the acquisition of 24hr Aquaflow Services. The acquisition contributed significantly to both revenue and EBITDA, with a 35% rise in gross profit and a 12% increase in adjusted EBITDA. Despite market challenges, the integration of 24hr Aquaflow Services has opened new revenue streams and cross-selling opportunities, helping to mitigate pressures in specialist cleaning services. The company remains focused on mid-market opportunities and operational efficiencies through initiatives like Project Sparkle, while adopting a cautious approach to new business conversion due to economic pressures.

REACT Group PLC Sees Change in Major Holdings

REACT Group PLC has announced a change in its major holdings, with Dowgate Group Limited increasing its voting rights to 12.08% from a previous 11.87%. This acquisition of voting rights by Dowgate Group Limited, through entities like the Bank of New York Mellon and Royal Bank of Canada, signifies a strategic move that could impact the company’s governance and stakeholder dynamics.