Serco Group plc (SRP) AI Stock Analysis

• Market Cap: £3.03B
• Dividend Yield: 1.27%
• Average Volume (3M): 2.47M
• Price to Earnings (P/E): 5.9
• Beta (1Y): 0.80
• Revenue Growth: 0.84%
• EPS Growth: -62.73%
• Country: UK
• Employees: 50,000
• Sector: Industrials
• Sector Strength: 72
• Industry: Specialty Business Services
• EPS (TTM): 0.06
• Shares Outstanding: 1,002,746,030
• 10 Day Avg. Volume: 1,983,017
• 30 Day Avg. Volume: 2,474,055
• PEG Ratio: 2.61
• Price to Book (P/B): 3.62
• Price to Sales (P/S): 0.62
• P/FCF Ratio: 7.37
• 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: £271.25
• Price Target Upside: -11.36% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 4
• EPS Forecast (FY): 0.18
• Revenue Forecast (FY): £5.05B

• Rating: 79 Outperform
• Price Target: 350.00p ▲(14.38% Upside)
• Action: Reiterated Date: 03/06/26
• Date: Action: Reiterated 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.

Balance-sheet improvement

Marked deleveraging versus earlier years lowers refinancing risk and interest sensitivity, increasing financial flexibility for multi-year contract mobilizations. Improved equity and lower leverage support investment in bids, integration and potential further shareholder returns over the medium term.

Strong backlog & wins

A decade-high GBP 12.1bn pipeline and book-to-bill >100% provide durable revenue visibility and a steady award flow. High defence win rates and sizeable order intake underpin long-term contract renewals and scale advantages, reducing near-term revenue volatility from individual contract cycles.

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.

Higher net debt & finance costs

Increased leverage from the MT&S acquisition and buybacks raises interest expense and reduces headroom for future investments. Elevated net finance costs compress net margins and make earnings more sensitive to rate moves, constraining flexibility during future mobilizations or slower award timing.

Regional/immigration headwinds

Structural reductions in immigration-related revenue in UK and Australia and APAC disposals reduce baseline demand in those markets. Persistent regional headwinds require compensating wins elsewhere or portfolio rebalancing, raising execution risk and lengthening the timeline to restore prior revenue levels.

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 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 fixed-price contracts, cost-plus contracts, and performance-based contracts. Key revenue streams include management of defense and security services, transportation services (such as operating rail services), and various support services in healthcare and immigration. Additionally, Serco benefits from partnerships with government agencies that enhance its service delivery capabilities, allowing for expansion into new markets and sectors. Factors contributing to its earnings include successful contract renewals, the ability to win new contracts through competitive bidding, and effective cost management to maintain margins on service delivery.

Serco Group plc Financial Statement Overview

Summary

Strong and consistent operating/free cash flow supports earnings quality and resilience, and leverage has improved versus earlier years. Offsetting factors include thin margins and notable earnings volatility (sharp 2024 dip), with some reduced visibility from missing latest-year leverage/return ratios.

Income Statement

Revenue has grown over the period (2020–2025), with 2025 showing a strong rebound after a modest 2024 decline. Profitability is positive but somewhat choppy: net income fell sharply in 2024 before improving in 2025, and operating profit has also fluctuated year to year. Margins (where provided) are generally thin for the sector, which limits upside if costs rise or contracts reset unfavorably.

Balance Sheet

Leverage looks manageable overall, with debt-to-equity improving from above 1.0 in 2020 to below 1.0 in the most recently provided ratio (2024), indicating a healthier capital structure than earlier years. Equity has generally increased versus 2020 levels, supporting the balance sheet. However, returns on equity have been volatile (strong in 2021–2023, weaker in 2024), and the latest year (2025) lacks leverage/return ratios, limiting visibility into the most current balance-sheet quality.

Cash Flow

Cash generation is a clear strength: operating cash flow and free cash flow are consistently strong across years, and free cash flow remains high in absolute terms. Free cash flow has generally tracked above reported earnings in most years (where provided), which supports earnings quality. The main weakness is growth volatility—free cash flow growth swings meaningfully, including a decline in 2025—suggesting timing effects or working-capital/contract-driven variability.

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	504.40M	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

• Technical Analysis Sentiment: Positive
• Last Price: 306.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• 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 306 is above the 20-day moving average (MA) of 299.34, above the 50-day MA of 295.36, and above the 200-day MA of 243.38, indicating a bullish trend. The MACD of 2.18 indicates Negative momentum. The RSI at 61.22 is Neutral, neither overbought nor oversold. The STOCH value of 70.99 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
SRP	79 Outperform	£3.03B	5.87	5.21%	1.27%	0.84%	-62.73%
MTO	76 Outperform	£2.19B	13.52	20.62%	2.58%	11.42%	-17.18%
RTO	74 Outperform	£11.84B	27.21	5.93%	1.68%	-1.58%	-34.64%
RST	66 Neutral	£316.29M	27.81	4.01%	2.31%	6.90%	145.00%
ITRK	65 Neutral	£6.21B	21.21	29.71%	3.44%	1.14%	17.74%
CPI	64 Neutral	£434.04M	-12.59	9.00%	―	-4.87%	―
Sector *	63 Neutral	$10.79B	15.43	7.44%	2.01%	2.89%	-14.66%

Serco Group plc Corporate Events

Serco launches up to £75m share buyback managed by RBC

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 treasury and subsequently cancel them, reducing the share count and potentially enhancing earnings per share.

RBC Europe Limited has been appointed to manage the buyback independently, with trading decisions made at RBC’s sole discretion and in accordance with UK listing rules and regulatory safe harbour provisions. Serco will disclose transactions within seven trading sessions of execution, and has cautioned that the programme may not be implemented in full, leaving some flexibility in its capital allocation plans.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £370.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco lifts order book and launches new £75m buyback as 2025 results underpin 2026 growth plan

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 sheet with leverage at 0.7x. Order intake reached £5.5bn, roughly two‑thirds from defence, lifting the order book to £14.5bn and supporting an 8% dividend increase, a completed £50m buyback and a new £75m programme as the company leans into rising demand from governments under fiscal pressure.

Management highlighted an £12.1bn pipeline, more than doubling in North America, ongoing productivity initiatives to push margins toward 6% in 2026, and portfolio reshaping in Asia‑Pacific, including the sale of Hong Kong operations and the integration of MT&S. Serco reiterated 2026 guidance for about £5bn of revenue, ~3% organic growth and underlying operating profit of around £300m, signalling confidence that defence‑led growth, contract ramp‑ups and efficiency gains will sustain earnings and cash generation for shareholders and public‑sector clients alike.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £370.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Updates Total Voting Rights After New Share Issue

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 capital stands at 1,002,746,014 ordinary shares, all of which carry voting rights, with no shares held in treasury. This disclosure provides an updated denominator for shareholders assessing whether they must report holdings or changes in their interests under the UK Financial Conduct Authority’s Disclosure Guidance and Transparency Rules, supporting transparency and regulatory compliance in Serco’s shareholder base.

The most recent analyst rating on (GB:SRP) stock is a Hold with a £317.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Confirms Total Voting Rights with Over 1 Billion Shares in Issue

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 reference figure shareholders must use when assessing and reporting any holdings or changes in their interests under UK disclosure and transparency rules, thereby supporting regulatory compliance and transparency in the company’s shareholder base.

The most recent analyst rating on (GB:SRP) stock is a Sell with a £140.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Cancels Treasury Shares, Confirms Over 1 Billion Shares in Issue

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 company’s capital structure and confirms that all issued shares now carry voting rights, providing shareholders with a clear denominator for calculating disclosure thresholds under the UK’s transparency rules and potentially signalling a more streamlined approach to Serco’s balance sheet management.

The most recent analyst rating on (GB:SRP) stock is a Sell with a £140.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Group Appoints Mark Reid as New CFO

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 from his previous role at Proximus and other senior positions at companies like Liberty Global and British Airways. This leadership transition is expected to strengthen Serco’s financial foundations and support its ongoing growth and innovation in serving government clients worldwide.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £288.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.

Serco Group Reports Strong 2025 Performance and Positive 2026 Outlook

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 around £5.0 billion and an underlying operating profit of £300 million, supported by strategic acquisitions and operational improvements. The company’s robust financial position and expanded leadership team are expected to enhance its market position, particularly in defense, while maintaining high levels of customer retention and operational excellence.

The most recent analyst rating on (GB:SRP) stock is a Buy with a £288.00 price target. To see the full list of analyst forecasts on Serco Group plc stock, see the GB:SRP Stock Forecast page.