Latest news with #DCCplc
Yahoo
13-06-2025
- Business
- Yahoo
Is DCC plc (LON:DCC) Trading At A 49% Discount?
DCC's estimated fair value is UK£93.06 based on 2 Stage Free Cash Flow to Equity Current share price of UK£47.18 suggests DCC is potentially 49% undervalued The UK£63.08 analyst price target for DCC is 32% less than our estimate of fair value Does the June share price for DCC plc (LON:DCC) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by taking the expected future cash flows and discounting them to today's value. We will use the Discounted Cash Flow (DCF) model on this occasion. It may sound complicated, but actually it is quite simple! Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (£, Millions) UK£458.9m UK£504.1m UK£532.4m UK£575.8m UK£609.2m UK£638.6m UK£665.0m UK£689.3m UK£712.2m UK£734.1m Growth Rate Estimate Source Analyst x5 Analyst x8 Analyst x8 Analyst x6 Est @ 5.79% Est @ 4.82% Est @ 4.13% Est @ 3.66% Est @ 3.32% Est @ 3.09% Present Value (£, Millions) Discounted @ 8.7% UK£422 UK£427 UK£415 UK£413 UK£402 UK£388 UK£371 UK£354 UK£337 UK£319 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£3.8b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.5%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.7%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = UK£734m× (1 + 2.5%) ÷ (8.7%– 2.5%) = UK£12b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£12b÷ ( 1 + 8.7%)10= UK£5.3b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is UK£9.2b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of UK£47.2, the company appears quite undervalued at a 49% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at DCC as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.7%, which is based on a levered beta of 1.196. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for DCC Strength Debt is not viewed as a risk. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Industrials market. Opportunity Annual earnings are forecast to grow faster than the British market. Good value based on P/E ratio and estimated fair value. Threat Dividends are not covered by earnings. Annual revenue is forecast to grow slower than the British market. Although the valuation of a company is important, it is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For DCC, we've put together three further items you should assess: Risks: You should be aware of the 2 warning signs for DCC we've uncovered before considering an investment in the company. Future Earnings: How does DCC's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the LSE every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
RTÉ News
09-06-2025
- Business
- RTÉ News
Flogas to power main stage at Electric Picnic with renewable energy
Flogas has announced its partnership with Electric Picnic, becoming the festival's official energy partner. The collaboration will see Flogas, part of DCC plc, power the Electric Picnic main stage with renewable electricity via the electricity grid, reducing the event's carbon footprint and showcasing best practices for sustainable event management. At the centre of the partnership is a Corporate Power Purchase agreement (CPPA) between Flogas and Highfield Energy's Jaroma wind farm in Co Tipperary. Ensuring the grid supplied electricity powering the main stage is sourced from Irish renewable wind energy, any balance of consumption not powered by this CPPA is backed by GOs (Guarantee of Origin). Flogas said this not only guarantees a cleaner, greener festival experience but also reflects both organisations' long-term commitment to environmental leadership. "This partnership with Electric Picnic is a proud moment for Flogas," said John Rooney, Managing Director of Flogas. "We're delighted to be powering the main stage with renewable electricity, helping to significantly cut the festival's carbon emissions. "It's a fantastic opportunity to demonstrate how local, renewable energy can deliver at scale and support a more sustainable future for everyone." Melvin Benn, Festival Director of Electric Picnic said, "We're delighted to welcome Flogas as the Official Energy Partner of Electric Picnic. Flogas's expertise and leadership in renewable energy make them the perfect partner as we continue to reduce the festival's environmental impact."
Yahoo
18-05-2025
- Business
- Yahoo
Do These 3 Checks Before Buying DCC plc (LON:DCC) For Its Upcoming Dividend
Readers hoping to buy DCC plc (LON:DCC) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date generally occurs two days before the record date, which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Accordingly, DCC investors that purchase the stock on or after the 22nd of May will not receive the dividend, which will be paid on the 17th of July. The company's next dividend payment will be UK£1.4021 per share. Last year, in total, the company distributed UK£2.06 to shareholders. Looking at the last 12 months of distributions, DCC has a trailing yield of approximately 4.3% on its current stock price of UK£48.08. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether DCC can afford its dividend, and if the dividend could grow. Our free stock report includes 2 warning signs investors should be aware of before investing in DCC. Read for free now. If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Last year DCC paid out 98% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings. A useful secondary check can be to evaluate whether DCC generated enough free cash flow to afford its dividend. Dividends consumed 54% of the company's free cash flow last year, which is within a normal range for most dividend-paying organisations. It's good to see that while DCC's dividends were not well covered by profits, at least they are affordable from a cash perspective. Still, if this were to happen repeatedly, we'd be concerned about whether the dividend is sustainable in a downturn. Check out our latest analysis for DCC Click here to see the company's payout ratio, plus analyst estimates of its future dividends. Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that DCC's earnings are down 3.4% a year over the past five years. Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. DCC has delivered an average of 10% per year annual increase in its dividend, based on the past 10 years of dividend payments. The only way to pay higher dividends when earnings are shrinking is either to pay out a larger percentage of profits, spend cash from the balance sheet, or borrow the money. DCC is already paying out a high percentage of its income, so without earnings growth, we're doubtful of whether this dividend will grow much in the future. Is DCC an attractive dividend stock, or better left on the shelf? Earnings per share have been shrinking in recent times. Additionally, DCC is paying out quite a high percentage of its earnings, and more than half its cash flow, so it's hard to evaluate whether the company is reinvesting enough in its business to improve its situation. With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of DCC. Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with DCC. In terms of investment risks, we've identified 2 warning signs with DCC and understanding them should be part of your investment process. A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
17-05-2025
- Business
- Yahoo
DCC (LON:DCC) Is Increasing Its Dividend To £1.4
DCC plc (LON:DCC) has announced that it will be increasing its dividend from last year's comparable payment on the 17th of July to £1.4. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, the company was paying out 98% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 55%. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor. The next year is set to see EPS grow by 117.4%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 49% which would be quite comfortable going to take the dividend forward. See our latest analysis for DCC The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from £0.769 total annually to £2.06. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time. Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. DCC has seen earnings per share falling at 3.4% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited. Overall, we always like to see the dividend being raised, but we don't think DCC will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think DCC is a great stock to add to your portfolio if income is your focus. Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for DCC that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
17-05-2025
- Business
- Yahoo
DCC (LON:DCC) Is Increasing Its Dividend To £1.4
DCC plc (LON:DCC) has announced that it will be increasing its dividend from last year's comparable payment on the 17th of July to £1.4. This will take the dividend yield to an attractive 4.3%, providing a nice boost to shareholder returns. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, the company was paying out 98% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 55%. Given that the dividend is a cash outflow, we think that cash is more important than accounting measures of profit when assessing the dividend, so this is a mitigating factor. The next year is set to see EPS grow by 117.4%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 49% which would be quite comfortable going to take the dividend forward. See our latest analysis for DCC The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from £0.769 total annually to £2.06. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time. Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, things aren't all that rosy. DCC has seen earnings per share falling at 3.4% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited. Overall, we always like to see the dividend being raised, but we don't think DCC will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think DCC is a great stock to add to your portfolio if income is your focus. Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for DCC that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
