Serco Group plc (GB:SRP)
LSE:SRP
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Serco Group plc
(LSE:SRP)
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Rating:79Outperform
Price Target:
350.00 p
▲(15.36% Upside)
Action:ReiteratedDate:03/06/26
The score is driven primarily by strong cash generation and an improved balance-sheet profile, supported by a very low P/E valuation. Technicals are positive with the stock in an uptrend, while earnings-call takeaways are constructive (profit-growth guidance and strong pipeline) but tempered by near-term headwinds (immigration exposure), higher debt/finance costs, and execution/timing risks.
Positive Factors
Cash generation
Consistently high operating and free cash flow with 112% trading cash conversion supports funding of capex, acquisitions, buybacks and dividends without destabilizing operations. Strong cash conversion improves resilience across the contract lifecycle and cushions timing volatility in receivables.
Negative Factors
Thin margins / modest organic growth
Low single-digit organic growth and sector-thin margins limit earnings upside and increase sensitivity to cost inflation or contract repricing. Structural margin constraints reduce buffer for integration costs and make long-term profit growth dependent on efficiency gains or higher-margin contract mix.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Consistently high operating and free cash flow with 112% trading cash conversion supports funding of capex, acquisitions, buybacks and dividends without destabilizing operations. Strong cash conversion improves resilience across the contract lifecycle and cushions timing volatility in receivables.
Read all positive factors
Serco Group plc (SRP) vs. iShares MSCI United Kingdom ETF (EWC)
Market Cap
£2.86B
Dividend Yield1.27%
Average Volume (3M)2.47M
Price to Earnings (P/E)19.4
Beta (1Y)0.67
Revenue Growth0.84%
EPS Growth-62.73%
CountryUK
Employees50,000
SectorIndustrials
Sector Strength72
IndustrySpecialty Business Services
Share Statistics
EPS (TTM)0.06
Shares Outstanding998,645,700
10 Day Avg. Volume1,983,017
30 Day Avg. Volume2,474,055
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)3.23
Price to Sales (P/S)0.57
P/FCF Ratio6.97
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
£333.50Price Target Upside9.92% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)0.18
Revenue Forecast (FY)£5.04B
Serco Group plc Business Overview & Revenue Model
Company Description
Serco Group plc provides public services in the United Kingdom, Europe, North America, the Asia Pacific, and the Middle East. The company offers base and operational support engineering, and management and information, as well as nuclear, space, a...
How the Company Makes Money
Serco Group plc generates revenue primarily through long-term contracts with government entities and public sector organizations, which typically involve the delivery of essential services. The company’s revenue model is based on a combination of ...
Serco Group plc Earnings Call Summary
Earnings Call Date:Mar 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jul 30, 2026
Earnings Call Sentiment Positive
The call presented a broadly positive operational and financial story: headline revenue and profit grew, a record decade-high GBP 12.1bn pipeline and strong order intake (book-to-bill >100%) underpin momentum into 2026. Cash generation, capital returns (dividend + buyback) and successful MT&S integration were notable achievements. Offsetting these positives were region-specific revenue reductions (APAC, Middle East), only modest organic growth (1%), higher net debt following the MT&S acquisition and elevated mobilization/integration costs. Management reiterated guidance for 2026 with revenue around GBP 5.0bn and underlying operating profit around GBP 300m, signaling confidence while acknowledging near-term headwinds in immigration and timing delays in some markets.Positive Updates
Revenue and Profit Growth
Revenue of GBP 4.9 billion, up 3% at constant currency; underlying operating profit GBP 272 million, up 1% at constant currency; margin 5.6% (middle of 5%-6% target range).
Negative Updates
Revenue Declines in APAC and Middle East
Asia Pacific revenue down 18% (12% organic decline plus 5% adverse currency) following the end of the Australian immigration contract and disposal of Hong Kong business; Middle East revenue down 18% driven by contract conclusions and accounting impact of Mubadala JV.
Read all updates
Q4-2025 Updates
Positive
Negative
Revenue and Profit Growth
Revenue of GBP 4.9 billion, up 3% at constant currency; underlying operating profit GBP 272 million, up 1% at constant currency; margin 5.6% (middle of 5%-6% target range).
Read all positive updates
Company Guidance
Serco's 2026 guidance targets revenue of around GBP 5.0 billion (c.3% organic growth), assuming a full‑year contribution from MT&S and contract ramp‑ups offset by an estimated c.3% organic headwind from reduced U.K. and Australian immigration activity; underlying operating profit of about GBP 300 million (>10% above 2025), implying a margin of ~6% (top of the 5–6% medium‑term target); net finance costs of c. GBP 52 million (reflecting MT&S‑funding debt and the new GBP 75 million buyback); free cash flow of c. GBP 160 million (consistent with the medium‑term ambition to convert at least 80% of profit into cash); and adjusted net debt expected to finish 2026 around GBP 165 million (vs. prior pre‑close guidance of GBP 150 million). The guidance is supported by 2025 results of revenue GBP 4.9 billion, underlying operating profit GBP 272 million (5.6% margin), cash conversion 112%, order intake GBP 5.5 billion (book‑to‑bill 114%), and a record GBP 12.1 billion pipeline.Serco Group plc Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
66
Positive
Cash Flow
84
Very Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 4.95B | 4.79B | 4.87B | 4.53B | 4.42B |
| Gross Profit | 562.00M | 518.60M | 495.50M | 493.50M | 468.00M |
| EBITDA | 292.00M | 326.90M | 448.90M | 382.00M | 371.50M |
| Net Income | 145.60M | 44.20M | 202.40M | 155.40M | 303.90M |
Balance Sheet | |||||
| Total Assets | 2.80B | 2.66B | 2.61B | 2.75B | 2.73B |
| Cash, Cash Equivalents and Short-Term Investments | 199.30M | 183.00M | 94.40M | 57.20M | 198.40M |
| Total Debt | 909.30M | 806.40M | 659.90M | 708.90M | 807.30M |
| Total Liabilities | 1.92B | 1.82B | 1.58B | 1.72B | 1.73B |
| Stockholders Equity | 873.60M | 842.50M | 1.03B | 1.03B | 1.01B |
Cash Flow | |||||
| Free Cash Flow | 405.60M | 385.00M | 368.40M | 307.80M | 317.80M |
| Operating Cash Flow | 427.10M | 419.40M | 393.10M | 327.20M | 349.90M |
| Investing Cash Flow | -279.50M | -7.40M | -5.40M | -35.30M | -232.30M |
| Financing Cash Flow | -127.80M | -322.30M | -347.90M | -436.80M | -250.10M |
Serco Group plc Technical Analysis
Neutral
303.40
Price Trends
302.47
Negative
284.97
Positive
254.37
Positive
Market Momentum
-4.00
Positive
38.45
Neutral
19.57
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SRP, the sentiment is Neutral. The current price of 303.4 is below the 20-day moving average (MA) of 306.01, above the 50-day MA of 302.47, and above the 200-day MA of 254.37, indicating a neutral trend. The MACD of -4.00 indicates Positive momentum. The RSI at 38.45 is Neutral, neither overbought nor oversold. The STOCH value of 19.57 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GB:SRP.
Serco Group plc Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | £2.86B | 19.41 | 16.69% | 1.27% | 0.84% | -62.73% | |
76 Outperform | £2.18B | 13.52 | 20.41% | 2.58% | 11.42% | -17.18% | |
65 Neutral | £5.70B | 21.21 | 31.07% | 3.44% | 1.14% | 17.74% | |
65 Neutral | £11.96B | 31.67 | 6.51% | 1.68% | -1.58% | -34.64% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
54 Neutral | £330.14M | 275.23 | 0.58% | 2.31% | 6.90% | 145.00% | |
41 Neutral | £329.87M | -2.81 | -142.88% | ― | -4.87% | ― |
* Industrials Sector Average
GB:SRP
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Serco Group plc Corporate Events
Stock Buyback
Serco launches up to £75m share buyback managed by RBC
Positive
Mar 5, 2026
Serco Group plc has launched a share repurchase programme of up to £75 million, to run from 9 March to no later than 31 July 2026, using remaining authority granted at its 2025 AGM. The company plans to transfer any repurchased shares into tr...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Serco lifts order book and launches new £75m buyback as 2025 results underpin 2026 growth plan
Positive
Mar 5, 2026
Serco reported 2025 revenue of £4.9bn, up 3% at constant currency, with underlying operating profit of £272m and a margin of 5.6%, while strong free cash flow of £219m and trading cash conversion of 112% underpinned a solid balance ...
Business Operations and StrategyRegulatory Filings and Compliance
Serco Updates Total Voting Rights After New Share Issue
Neutral
Feb 2, 2026
Serco Group plc has updated investors on its capital structure following the issue of 2,911 new ordinary shares of 2 pence each under its blocklisting facility on 23 January 2026. As of 31 January 2026, the company’s total issued share capit...
Regulatory Filings and Compliance
Serco Confirms Total Voting Rights with Over 1 Billion Shares in Issue
Neutral
Dec 31, 2025
Serco Group plc has confirmed that as of 31 December 2025 its total issued share capital comprises 1,002,743,103 ordinary shares of 2 pence each, with none held in treasury. This means all 1,002,743,103 shares carry voting rights, providing the re...
Business Operations and StrategyRegulatory Filings and Compliance
Serco Cancels Treasury Shares, Confirms Over 1 Billion Shares in Issue
Positive
Dec 19, 2025
Serco Group plc has cancelled 21,112,140 ordinary shares previously held in treasury, effective 18 December 2025, leaving the company with no shares held in treasury and a total of 1,002,743,103 ordinary shares in issue. The move clarifies the com...
Executive/Board Changes
Serco Group Appoints Mark Reid as New CFO
Positive
Dec 17, 2025
Serco Group plc has announced the appointment of Mark Reid as the new Group Chief Financial Officer, effective March 6, 2026, succeeding Nigel Crossley who is retiring after 11 years. Mark Reid brings extensive international finance experience fro...
Business Operations and StrategyFinancial Disclosures
Serco Group Reports Strong 2025 Performance and Positive 2026 Outlook
Positive
Dec 17, 2025
Serco Group plc reported a strong performance in 2025 with a revenue of approximately £4.9 billion, driven by new and expanded contracts in defense and other sectors. The company anticipates continued growth into 2026, forecasting revenue of ...
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.