Serco Group plc (SRP) AI Stock Analysis

• Market Cap: £2.27B
• Dividend Yield: 1.33%
• Average Volume (3M): 2.37M
• Price to Earnings (P/E): 47.2
• Beta (1Y): 0.66
• Revenue Growth: 0.84%
• EPS Growth: -62.73%
• Country: UK
• Employees: 50,000
• Sector: Industrials
• Sector Strength: 80
• Industry: Specialty Business Services
• EPS (TTM): 0.10
• Shares Outstanding: 1,022,521,060
• 10 Day Avg. Volume: 4,785,765
• 30 Day Avg. Volume: 2,367,977
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• 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: £234.13
• Price Target Upside: 2.06% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 77 Outperform
• Price Target: 260.00p ▲(13.34% Upside)

Serco Group plc's stock score is driven by strong technical indicators and positive earnings call sentiment, despite valuation concerns. Financial performance shows mixed results, with strong cash flow but profitability and debt challenges. The stock's bullish momentum and strategic growth in the defense sector are key strengths.

Serco Group plc Business Overview & Revenue Model

Company Description

Serco Group plc (SRP) is a leading international service company that manages and delivers essential public services across various sectors, including defense, transport, immigration, healthcare, and citizen services. With a strong presence in the UK, Europe, North America, and the Asia-Pacific region, Serco provides a diverse range of services such as operating prisons, managing public transportation systems, and delivering healthcare services to government clients and organizations.

How the Company Makes Money

Serco Group plc primarily generates revenue through long-term contracts with government agencies and public sector organizations. The company's revenue model is based on providing outsourced services that are typically funded by government budgets. Key revenue streams include contracts for defense services, where Serco provides operational support and management; transportation services, including the operation of rail and bus networks; and healthcare services, where they manage patient care facilities and deliver medical services. Additionally, Serco benefits from performance-based incentives included in some contracts, which can enhance profitability based on the quality and efficiency of services provided. Significant partnerships with various government departments and agencies also contribute to its financial stability and growth, as these relationships facilitate ongoing service contracts and opportunities for expansion.

Serco Group plc Financial Statement Overview

Summary

Serco Group plc exhibits strong cash flow generation and stable equity positioning, although challenges persist with profitability and rising debt levels. The ability to convert revenue into profit and manage operational costs effectively will be crucial moving forward.

Income Statement

The income statement reveals a mixed performance. The gross profit margin shows stability with a modest increase over recent years. However, the net profit margin declined significantly in the latest year, indicating profitability challenges. Revenue growth has been inconsistent, with a slight contraction in the latest period. The EBIT margin has seen a noticeable decrease, reflecting operational inefficiencies, while EBITDA margin also fell, indicating pressure on earnings before depreciation and amortization.

Balance Sheet

The balance sheet reflects moderate financial health. The debt-to-equity ratio has risen, suggesting increased leverage, which could pose risks if earnings do not improve. Return on equity has decreased, showing reduced efficiency in generating profits from shareholders' equity. However, the equity ratio remains stable, indicating reasonable financial stability and asset management.

Cash Flow

Cash flow statements indicate strong cash generation. Free cash flow has grown consistently, demonstrating effective cash management and operational efficiency. The operating cash flow to net income ratio is robust, signaling that cash flow generation remains strong relative to accounting profits. The free cash flow to net income ratio also suggests solid cash conversion, despite lower net income.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.79B	4.87B	4.53B	4.42B	3.88B
Gross Profit	518.60M	495.50M	493.50M	468.00M	383.00M
EBITDA	326.90M	422.00M	382.00M	365.20M	299.90M
Net Income	44.20M	202.40M	155.40M	303.90M	133.80M
Balance Sheet
Total Assets	2.66B	2.61B	2.75B	2.73B	2.41B
Cash, Cash Equivalents and Short-Term Investments	183.00M	94.40M	57.20M	198.40M	335.70M
Total Debt	806.40M	659.90M	708.90M	807.30M	791.40M
Total Liabilities	1.82B	1.58B	1.72B	1.73B	1.70B
Stockholders Equity	842.50M	1.03B	1.03B	1.01B	713.30M
Cash Flow
Free Cash Flow	385.00M	368.40M	307.80M	317.80M	218.40M
Operating Cash Flow	419.40M	393.10M	327.20M	349.90M	268.50M
Investing Cash Flow	-7.40M	-5.40M	-35.30M	-232.30M	600.00K
Financing Cash Flow	-322.30M	-347.90M	-436.80M	-250.10M	-24.70M

Serco Group plc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 229.40
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:SRP, the sentiment is Positive. The current price of 229.4 is above the 20-day moving average (MA) of 215.51, above the 50-day MA of 208.45, and above the 200-day MA of 171.94, indicating a bullish trend. The MACD of 5.73 indicates Negative momentum. The RSI at 78.09 is Negative, neither overbought nor oversold. The STOCH value of 89.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GB:SRP.

Serco Group plc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ITRK	80 Outperform	£7.25B	20.62	29.71%	3.37%	1.14%	17.74%
SRP	77 Outperform	£2.27B	47.17	5.21%	1.33%	0.84%	-62.73%
MTO	74 Outperform	£1.92B	17.90	23.48%	2.96%	14.34%	-16.43%
RST	67 Neutral	£358.74M	38.19	4.01%	2.02%	6.90%	―
RTO	66 Neutral	£9.17B	35.85	5.93%	2.06%	-1.58%	-34.64%
Sector *	63 Neutral	$10.71B	16.25	6.57%	2.09%	2.65%	-16.21%
CPI	57 Neutral	£262.19M	16.02	9.00%	―	-4.87%	―

Serco Group plc Corporate Events

Serco Group Enhances Shareholder Value with Strategic Buy-Back

Serco Group plc has announced the purchase of 268,484 ordinary shares, which will be held in treasury, as part of its ongoing share buy-back program initiated on 7 August 2025. This move increases the total number of shares held in treasury to 1,334,166, with 1,022,521,077 shares remaining in issue. The buy-back program is a strategic decision that could enhance shareholder value by reducing the number of shares available in the market, potentially increasing earnings per share and signaling confidence in the company’s financial health.

Serco Group Expands Share Buy-Back Program

Serco Group plc has announced the purchase of 276,684 ordinary shares as part of its ongoing share buy-back program, initiated on 7 August 2025. The company plans to hold these shares in treasury, which increases its total treasury shares to 1,065,682. This move is part of a strategic effort to manage its capital structure, potentially enhancing shareholder value and reflecting confidence in its financial health.

Serco Group Enhances Shareholder Value with Strategic Share Buy-Back

Serco Group plc has announced the acquisition of 277,001 of its own ordinary shares, which will be held in treasury. This purchase is part of a larger share buy-back program initiated on 7 August 2025, bringing the total number of shares acquired under the program to 788,998. The company now holds these shares in treasury, with 1,023,066,245 ordinary shares remaining in issue. This move is likely aimed at strengthening shareholder value and optimizing capital structure, reflecting positively on Serco’s financial strategy.

Serco Group Enhances Shareholder Value with Share Buy-Back

Serco Group plc has announced the purchase of 275,393 of its own ordinary shares, which will be held in treasury. This transaction is part of a share buy-back program initiated on 7 August 2025, through which the company has acquired a total of 511,997 shares. The move is likely aimed at optimizing the company’s capital structure and potentially enhancing shareholder value. Following this transaction, the company now holds 511,997 shares in treasury, with 1,023,343,246 shares remaining in issue, impacting the calculation of voting rights for shareholders.

Serco Group Initiates Share Buy-Back Program

Serco Group plc has announced the purchase of 236,604 ordinary shares, which will be held in treasury as part of a share buy-back program initiated on August 7, 2025. This move is part of the company’s strategy to manage its capital structure and could potentially enhance shareholder value by reducing the number of shares in circulation, thereby increasing earnings per share.

Serco Group Announces £50 Million Share Repurchase Program

Serco Group plc has announced a share repurchase program, intending to buy back shares worth up to £50 million between August 11, 2025, and December 31, 2025. The program will be managed by J.P. Morgan Securities plc, and any repurchased shares will be transferred into treasury and subsequently canceled. This move is in line with the company’s strategy to manage its capital structure and is expected to have implications for shareholder value and market perception.

Serco Group Reports Strong First-Half Performance and Announces £50m Share Buyback

Serco Group plc reported a strong performance in the first half of 2025, with a revenue increase to £2.4 billion and a robust order intake of £3.2 billion, heavily weighted towards the defense sector. The company announced a new £50 million share buyback, reflecting confidence in its financial position and future growth prospects. The integration of the MT&S acquisition is progressing well, adding scale and capability to Serco’s operations. The company is well-positioned for growth, supported by a growing pipeline and increased order book, particularly in defense, as governments face complex challenges requiring Serco’s services.

Serco Appoints Keith Williams as New Board Chair

Serco Group plc has announced the appointment of Keith Williams as the new Board Chair, effective from January 2026, succeeding John Rishton. Williams, who brings extensive leadership experience from various industries, is expected to support Serco’s growth and value creation for stakeholders, continuing the company’s trajectory of delivering critical public services globally.

Serco Group Reports Strong First-Half Performance and Confirms Full-Year Guidance

Serco Group plc reported a strong performance in the first half of 2025, with revenue reaching approximately £2.4 billion, marking a 2% increase. The company secured around £3 billion in contract awards, particularly in the defense sector, and completed the acquisition of MT&S, enhancing its capabilities in the US and international defense markets. Despite challenges in the immigration sector, Serco remains confident in its full-year guidance, expecting organic revenue growth of about 1% and maintaining an underlying operating profit forecast of £260 million. The company’s strong financial position and strategic acquisitions position it well for future growth and shareholder value.

Serco Completes Strategic Acquisition of MT&S to Boost Defense Sector

Serco Group plc has completed the acquisition of Northrop Grumman’s mission training and satellite ground network communications software business, MT&S, through its US subsidiary, Serco Inc. This acquisition is expected to significantly enhance Serco’s defense sector operations, which will now account for approximately 40% of the company’s revenue. The acquisition is projected to contribute $175 million in revenue and $20 million in underlying operating profit for 2025, with the transaction being accretive to earnings per share by 2026. The acquisition strengthens Serco’s position for future organic growth and increases its scale and breadth of solutions in the defense industry.