Serco Group plc (SRP) AI Stock Analysis

• Market Cap: £1.96B
• Dividend Yield: 2.92%
• Average Volume (3M): 2.77M
• Price to Earnings (P/E): 46.3
• Beta (1Y): 0.70
• Revenue Growth: -0.68%
• EPS Growth: -78.93%
• Country: UK
• Employees: 50,000
• Sector: Industrials
• Sector Strength: 88
• Industry: Specialty Business Services
• EPS (TTM): 0.08
• Shares Outstanding: 1,023,855,200
• 10 Day Avg. Volume: 2,523,550
• 30 Day Avg. Volume: 2,772,413
• PEG Ratio: -0.25
• Price to Book (P/B): 1.80
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 6.02
• 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: £220.00
• Price Target Upside: 13.52% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 72 Outperform
• Price Target: 207.00p ▲(6.81%Upside)

The overall score reflects strong corporate events and robust cash flow management as significant strengths. However, high valuation and signals of overbought technical conditions pose risks. Profitability challenges and rising debt levels also need to be addressed for sustained growth.

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, and maritime services for the defense sector; and custodial, immigration detention, and detainee transport and monitoring services for the justice and immigration sectors. It also provides rail, ferry, and cycle operations; road traffic management; and air traffic control services to the transportation sector, as well as integrated facilities management, pathology and non-clinical support, and patient administration and contact services for the health sector. In addition, the company offers citizen services, including contact centers and case management; middle, back office, and IT; and employment and skills services. The company serves the United Kingdom and Canadian governments, devolved authorities, and other public sector customers; and federal and civilian agencies, and various state and municipal governments. Serco Group plc was founded in 1929 and is based in Hook, the United Kingdom.

How the Company Makes Money

Serco Group plc generates revenue through long-term contracts with government and public sector organizations. Key revenue streams include providing outsourced services such as facilities management, border security, health services, and transportation management. The company often engages in public-private partnerships, leveraging its expertise to improve operational efficiency and service delivery for its clients. Factors contributing to Serco's earnings include its ability to secure multi-year contracts, its focus on operational excellence, and strategic expansions into new markets and sectors.

Serco Group plc Financial Statement Overview

Summary

Serco Group displays a mixed financial picture. Strong cash flow management and a stable equity position are strengths. However, challenges in profitability and rising debt levels pose potential risks. Improvement in revenue conversion into profit and operational cost management is essential for future financial health.

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
	EBIT
130.10M	230.60M	217.20M	216.20M	179.20M
	EBITDA
326.90M	422.00M	382.00M	365.20M	299.90M
	Net Income Common Stockholders
44.20M	202.40M	155.40M	303.90M	133.80M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
183.00M	94.40M	57.20M	198.40M	335.70M
	Total Assets
2.66B	2.61B	2.75B	2.73B	2.41B
	Total Debt
806.40M	659.90M	708.90M	807.30M	791.40M
	Net Debt
623.40M	565.50M	651.70M	608.90M	455.70M
	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: 193.80
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

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 193.8 is above the 20-day moving average (MA) of 188.20, above the 50-day MA of 174.27, and above the 200-day MA of 163.36, indicating a bullish trend. The MACD of 5.43 indicates Positive momentum. The RSI at 81.40 is Negative, neither overbought nor oversold. The STOCH value of 75.27 is Neutral, 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	79 Outperform	£7.57B	22.32	25.35%	4.29%	1.94%	16.26%
MTO	77 Outperform	£1.75B	17.48	23.48%	1.81%	15.25%	25.57%
SRP	72 Outperform	£1.96B	46.31	4.71%	2.92%	-0.68%	-78.93%
RTO	68 Neutral	£8.98B	29.35	7.38%	1.66%	1.13%	-19.48%
RST	68 Neutral	£347.10M	27.74	5.32%	0.79%	-0.65%	―
CPI	66 Neutral	£285.30M	3.82	49.03%	―	-10.33%	―
Sector *	66 Neutral	$4.51B	12.29	5.40%	3.67%	4.15%	-12.21%

Serco Group plc Corporate Events

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.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £225.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Secures £1bn Maritime Services Contracts with UK Ministry of Defence

Serco Group plc has secured three significant contracts valued at over £1 billion from the UK Ministry of Defence to provide maritime services for the Royal Navy. These contracts, which will commence later this year, include the procurement of new vessels and the provision of in-port and offshore support services, further solidifying Serco’s position in the defense market. This achievement is part of Serco’s broader strategy of expanding its defense contract portfolio globally, highlighting its role as a key partner in military operations and its commitment to modernizing naval support capabilities.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £2.83 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco CFO Engages in Share Acquisition Reflecting Confidence

Serco Group plc announced a transaction involving Nigel Crossley, the Group Chief Financial Officer, who participated in a Dividend Reinvestment Plan by acquiring ordinary shares. This transaction, compliant with the UK Market Abuse Regulation, reflects the company’s ongoing commitment to transparency and regulatory adherence. The acquisition of shares by a senior executive may indicate confidence in the company’s future performance, potentially impacting investor sentiment positively.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £225.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Group Announces Managerial Share Interest Changes

Serco Group plc announced changes in the interests of its managerial staff in ordinary shares, following the grant of dividend equivalents at a price of £1.593 per share. This move, which applies to various incentive plans, reflects the company’s commitment to aligning managerial interests with shareholder value, potentially impacting its operational strategies and stakeholder relationships.

Serco Group plc AGM Results and Leadership Update

Serco Group plc announced the successful passage of all resolutions at its Annual General Meeting, with a significant shareholder turnout of 77.70% of issued share capital. Notably, the Directors’ Remuneration Report received less than 80% approval, prompting the company to engage with shareholders for further consultation. Additionally, Lynne Peacock will step down as Chair of the Remuneration Committee, to be succeeded by Victoria Hull, while continuing her role as Senior Independent Director.

Serco Group Announces Managerial Share Transactions

Serco Group plc has announced changes in the share interests of its key managerial personnel due to vesting from the Long-Term Incentive Plan and the Deferred Bonus Plan granted in 2022. The transactions, which involve the sale of shares to cover tax liabilities, reflect the company’s adherence to regulatory requirements and demonstrate the financial management strategies of its leadership. This announcement may impact stakeholders by highlighting the company’s commitment to transparency and regulatory compliance.

Serco Group Aligns Executive Incentives with Shareholder Interests

Serco Group plc announced changes in the interests of its managerial staff in the company’s ordinary shares, linked to the Deferred Bonus Plan and Long-Term Incentive Plan. The grants, made in early April 2025, involve significant share awards to key executives, reflecting Serco’s commitment to aligning management incentives with shareholder interests. This move is expected to reinforce the company’s strategic objectives and enhance its market positioning by ensuring that its leadership remains motivated and invested in the company’s success.

Serco Group Announces Share Changes for CFO Under Bonus Plan

Serco Group plc announced changes in share interests for its Group Chief Financial Officer, Nigel Crossley, under the Equity Settled Bonus Plan. The announcement includes the vesting of an award granted in 2022 and the grant of a new award in 2025, highlighting Serco’s commitment to aligning managerial interests with company performance. The transaction reflects Serco’s strategic focus on incentivizing its leadership to drive innovation and support its global government service operations.

Serco Group’s Managerial Share Transaction Announcement

Serco Group plc announced a transaction involving the transfer of ordinary shares by David Eveleigh, Group General Counsel, to his spouse, Katharine Eveleigh. This transaction, valued at £654,302.95, was conducted outside a trading venue and is part of the company’s compliance with the UK Market Abuse Regulation. The announcement highlights the company’s adherence to regulatory requirements and transparency in managerial transactions.

Serco Group Releases 2024 Annual Report and 2025 AGM Notice

Serco Group plc has released its 2024 Annual Report and Accounts along with the 2025 Notice of Annual General Meeting, now accessible on the company’s website and the UK Listing Authority’s National Storage Mechanism. This publication is a routine disclosure that provides stakeholders with insights into the company’s financial performance and strategic direction, reinforcing its commitment to transparency and regulatory compliance.

Wellington Management Increases Stake in Serco Group

Wellington Management International Ltd has increased its stake in Serco Group PLC, crossing the 5% threshold for voting rights attached to shares and financial instruments. This acquisition signifies a notable shift in the ownership structure of Serco, potentially impacting its governance and strategic direction, as Wellington Management is a significant investment management entity.

Wellington Management Adjusts Holdings in Serco Group PLC

Wellington Management Group LLP has adjusted its holdings in Serco Group PLC, with a slight decrease in voting rights from 5.00% to 4.99%. This change reflects a minor shift in the financial instruments and voting rights held by Wellington, which could indicate strategic portfolio adjustments. The announcement may have implications for Serco’s shareholder dynamics but does not significantly alter the company’s market position.