REACT Group plc (REAT) AI Stock Analysis

• Market Cap: £11.94M
• Dividend Yield: N/A
• Average Volume (3M): 44.96K
• 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: 79
• Industry: Specialty Business Services
• EPS (TTM): -0.01
• Shares Outstanding: 23,636,610
• 10 Day Avg. Volume: 40,694
• 30 Day Avg. Volume: 44,958
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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: £54.00
• Price Target Upside: 6.93% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 64 Neutral
• Price Target: 54.00p ▲(6.93% Upside)

REACT Group plc's overall stock score is driven by strong financial performance and positive corporate events. However, technical analysis indicates bearish momentum, and valuation metrics suggest potential overvaluation. The company's strategic initiatives and financial stability are positive, but market sentiment and valuation concerns weigh on the score.

REACT Group plc Business Overview & Revenue Model

Company Description

REACT Group PLC provides specialist cleaning, and decontamination and hygiene service to the public and private sectors in the United Kingdom. The company offers air duct cleaning, animal and human fatality management, hazardous and biohazard cleaning and waste removal, carpets and floor cleaning, clinical waste removal, contract cleaning, crime scene and forensic cleaning, custody suite cleaning, decontamination, deep cleaning, detention centre cleaning, end of tenancy cleans, fire and smoke damage, fire damper testing, flood and sewage cleanup, and fly-tipping clearance services. It also provides graffiti removal, depot and warehouse cleaning, high level cleaning, ATEX explosive environment cleaning, air hygiene and grease extractor cleaning, highways laybys and picnic areas, house and horder clearances, housing association contract cleaning, kitchen grease extract cleaning, NHS trust cleaning contracts, nightly hospital cleans, university and college campuses cleaning, housing associations, office and commercial property cleaning, pigeon guano clearance and anti-bird control, platform and trackside decontamination, transport hubs, police and emergency vehicle cleaning, sharps and drugs paraphernalia removal, prison and detention centre cleaning, sharps search and removal, air hygiene and compliance, urgent incident cleaning, infection control cleaning, school contract cleaning, train carriage cleaning, and janitorial services. REACT Group Plc is based in Swadlincote, the United Kingdom.

How the Company Makes Money

REACT Group plc generates revenue primarily through service contracts and project-based work within its cleaning and facilities management sectors. The company's revenue model is anchored in providing specialized cleaning services, which are often billed on a per-contract basis or hourly rates. Key revenue streams include emergency response services, regular maintenance contracts for facilities, and bespoke cleaning solutions tailored to client needs. Additionally, REACT Group benefits from strategic partnerships with healthcare providers and facilities management firms, which enhance its market reach and service offerings. The company's ability to secure long-term contracts and its reputation for reliability and compliance with health and safety standards contribute significantly to its earnings.

REACT Group plc Financial Statement Overview

Summary

REACT Group plc exhibits strong financial performance with significant revenue growth and improved operational margins. The balance sheet is robust with low leverage and strong equity support, while cash flows are positive but show some volatility. Continued focus on improving net income and managing cash flow fluctuations will enhance financial stability.

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	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	20.75M	20.75M	19.58M	13.67M	7.70M	4.36M
Gross Profit	4.84M	5.72M	5.24M	3.26M	2.37M	1.45M
EBITDA	2.12M	2.07M	2.06M	410.00K	394.00K	261.00K
Net Income	18.00K	18.00K	50.00K	-701.00K	389.00K	188.00K
Balance Sheet
Total Assets	13.92M	13.92M	16.41M	15.68M	6.23M	3.16M
Cash, Cash Equivalents and Short-Term Investments	1.78M	1.78M	2.12M	979.00K	633.00K	1.78M
Total Debt	784.00K	784.00K	904.00K	1.08M	170.00K	43.00K
Total Liabilities	5.26M	5.26M	7.91M	7.34M	3.44M	967.00K
Stockholders Equity	8.66M	8.66M	8.49M	8.34M	2.79M	2.19M
Cash Flow
Free Cash Flow	2.34M	2.38M	2.33M	-888.00K	361.00K	237.00K
Operating Cash Flow	2.75M	2.79M	2.44M	-773.00K	432.00K	281.00K
Investing Cash Flow	-2.42M	-2.42M	-1.42M	-8.41M	-2.19M	-42.00K
Financing Cash Flow	-198.00K	-233.00K	-360.00K	7.00M	228.00K	1.10M

REACT Group plc Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 50.50
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:REAT, the sentiment is Neutral. The current price of 50.5 is above the 20-day moving average (MA) of 49.80, below the 50-day MA of 53.22, and below the 200-day MA of 69.41, indicating a neutral trend. The MACD of -0.62 indicates Negative momentum. The RSI at 38.77 is Neutral, neither overbought nor oversold. The STOCH value of 75.00 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:REAT.

REACT Group plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSW	77 Outperform	£14.58M	13.36	11.18%	3.02%	110.08%	1105.56%
CEPS	72 Outperform	£6.30M	10.87	23.19%	―	6.35%	4.15%
VNET	69 Neutral	£23.41M	27.91	3.15%	1.60%	-1.00%	7.35%
REAT	64 Neutral	£11.94M	900.00	-3.75%	―	6.90%	-242.86%
Sector *	64 Neutral	$10.95B	16.10	8.81%	1.99%	2.59%	-16.41%
CPP	48 Neutral	£10.54M	―	-177.83%	―	-18.97%	―
MIND	42 Neutral	£16.04M	―	-106.45%	―	-14.04%	24.84%

REACT Group plc Corporate Events

REACT Group Enhances Employee Investment with Share Incentive Plan

REACT Group plc announced the purchase of 882 Partnership Shares under its Share Incentive Plan, with Directors and PDMRs receiving additional Matching Shares at no cost. This initiative, managed by MUFG Corporate Markets, is designed to incentivize employees and align their interests with the company’s performance, potentially enhancing stakeholder value.

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.