As of May 22, 2025, SThree PLC has a Discounted Cash Flow (DCF) derived fair value of $398.26 per share. With the current market price at $230.50, this represents a potential upside of 72.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $393.70 |
| DCF Fair Value (10-year) | $398.26 |
| Potential Upside (5-year) | 70.8% |
| Potential Upside (10-year) | 72.8% |
| Discount Rate (WACC) | 8.3% - 11.4% |
Revenue is projected to grow from $1493 million in 11-2024 to $1957 million by 11-2034, representing a compound annual growth rate of approximately 2.7%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 11-2024 | 1493 | 10% |
| 11-2025 | 1416 | -5% |
| 11-2026 | 1474 | 4% |
| 11-2027 | 1503 | 2% |
| 11-2028 | 1533 | 2% |
| 11-2029 | 1583 | 3% |
| 11-2030 | 1637 | 3% |
| 11-2031 | 1708 | 4% |
| 11-2032 | 1859 | 9% |
| 11-2033 | 1896 | 2% |
| 11-2034 | 1957 | 3% |
Net profit margin is expected to improve from 3% in 11-2024 to 3% by 11-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 11-2024 | 50 | 3% |
| 11-2025 | 45 | 3% |
| 11-2026 | 47 | 3% |
| 11-2027 | 48 | 3% |
| 11-2028 | 49 | 3% |
| 11-2029 | 50 | 3% |
| 11-2030 | 52 | 3% |
| 11-2031 | 54 | 3% |
| 11-2032 | 59 | 3% |
| 11-2033 | 60 | 3% |
| 11-2034 | 62 | 3% |
with a 5-year average of $7 million. Projected CapEx is expected to maintain at approximately 0% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 11-2025 | 7 |
| 11-2026 | 8 |
| 11-2027 | 8 |
| 11-2028 | 8 |
| 11-2029 | 7 |
| 11-2030 | 7 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 78 |
| Days Inventory | 0 |
| Days Payables | 13 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2025 | 70 | 19 | 6 | (29) | 74 |
| 2026 | 74 | 20 | 7 | 12 | 36 |
| 2027 | 76 | 20 | 7 | 10 | 39 |
| 2028 | 77 | 21 | 7 | 2 | 47 |
| 2029 | 78 | 21 | 7 | 10 | 39 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 393.70 | 70.8% |
| 10-Year DCF (Growth) | 398.26 | 72.8% |
| 5-Year DCF (EBITDA) | 343.11 | 48.9% |
| 10-Year DCF (EBITDA) | 383.84 | 66.5% |
Is SThree PLC (STEM.L) a buy or a sell? SThree PLC is definitely a buy. Based on our DCF analysis, SThree PLC (STEM.L) appears to be significantly undervalued with upside potential of 72.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $230.50.