Weir Group PLC
LSE:WEIR
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Intrinsic Value
The intrinsic value of one WEIR stock under the Base Case scenario is 2 419.54 GBX. Compared to the current market price of 2 136 GBX, Weir Group PLC is Undervalued by 12%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Weir Group PLC
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Fundamental Analysis
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Weir Group PLC is a prominent British engineering company that specializes in manufacturing equipment and providing services for the global mining, oil, and gas industries. Established in 1871 and headquartered in Glasgow, Scotland, Weir has grown to become a key player in the market, offering innovative solutions that enhance productivity and efficiency. With a commitment to sustainability and safety, the company focuses on developing advanced technology and engineered solutions to tackle some of the most pressing challenges faced by resource-related industries. Weir’s portfolio includes high-performance pumps, valves, and wear-resistant materials, all designed to optimize operations in a d...
Weir Group PLC is a prominent British engineering company that specializes in manufacturing equipment and providing services for the global mining, oil, and gas industries. Established in 1871 and headquartered in Glasgow, Scotland, Weir has grown to become a key player in the market, offering innovative solutions that enhance productivity and efficiency. With a commitment to sustainability and safety, the company focuses on developing advanced technology and engineered solutions to tackle some of the most pressing challenges faced by resource-related industries. Weir’s portfolio includes high-performance pumps, valves, and wear-resistant materials, all designed to optimize operations in a demanding environment.
As a long-term investment, Weir Group PLC stands out due to its robust growth potential driven by global trends in energy transition and resource extraction. The company has strategically expanded its presence in emerging markets and consistently invests in research and development to stay ahead of industry demands. Weir’s strong financial foundation, coupled with a history of resilience through market fluctuations, signals a promising outlook for investors. With a sharp focus on maintaining high margins and generating sustainable cash flow, Weir Group offers not just operational excellence but also an opportunity for investors seeking stability and growth in the evolving landscape of engineering and industrial services.
The Weir Group PLC is a global engineering company predominantly serving the mining, oil and gas, power, and industrial sectors. Its core business segments can be categorized as follows:
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Mining: This segment focuses on providing equipment and services for the extraction and processing of minerals. Weir Group designs and manufactures a range of products, including crushers, pumps, and valves that are essential for mining operations. The company operates within this segment to improve efficiency and reduce operational costs for mining companies.
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Oil & Gas: Weir Group supplies technology and equipment to support oil and gas exploration and production. This includes high-pressure pumping systems, valves, and flow control solutions that enhance the reliability and safety of operations. The Oil & Gas segment aims to cater to onshore and offshore production needs.
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Power & Industrial: This segment offers products and services that support power generation and various industrial applications. It includes solutions for the generation of renewable energy, steam generation for power plants, and various industrial applications that require robust engineering solutions.
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Services: In addition to its equipment manufacturing, Weir Group emphasizes the provision of aftermarket services. These services include maintenance, repair, and refurbishment of equipment, as well as technical support, which is critical for extending the life cycle and optimizing performance of the products used by their customers.
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Specialist Solutions: This segment focuses on delivering tailored, high-performance solutions for specific applications across different industries, including the supply of specialized products designed to meet unique customer requirements.
Overall, Weir Group PLC is structured to leverage its engineering expertise across these segments, aiming to provide innovative solutions, improve operational efficiency for clients, and create sustainable growth.
Weir Group PLC, a global engineering company specializing in mining and oil & gas equipment, possesses several unique competitive advantages over its rivals:
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Strong Brand Reputation: Weir Group has built a strong and trusted brand over decades, known for its engineering excellence and reliability. This reputation helps attract and retain customers.
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Innovative Technology: Weir invests heavily in research and development, allowing it to produce innovative products and solutions that improve efficiency, reduce costs, and enhance productivity for its customers. Their focus on cutting-edge technology has set them apart in sectors like slurry pumps and valves.
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Tailored Solutions: Weir Group specializes in providing customized solutions for specific customer needs, particularly in harsh operating environments. This ability to offer tailored products enhances customer loyalty and increases switching costs for clients.
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Global Presence with Local Expertise: The company operates in multiple countries, which not only allows for a broad market reach but also the capability to address local market demands and regulations effectively. This can often lead to operational efficiencies and better client relationships.
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Diverse Product Portfolio: Weir offers a wide range of products and services across different sectors such as mining, oil & gas, and water management. This diversification helps mitigate risks associated with relying heavily on a single market segment.
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Sustainability Focus: Weir Group is increasingly focused on sustainable practices, offering solutions that support energy efficiency and reduced environmental impact. This is becoming a critical factor for many customers globally and can create an edge over rivals.
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Experienced Workforce: The company boasts a highly skilled workforce with deep industry knowledge. This expertise enables them to better serve clients and innovate effectively.
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Strategic Partnerships and Alliances: Weir has established important partnerships and collaborations within the industry, helping them to leverage new technologies and market insights, thus enhancing their competitive position.
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Robust After-Sales Service: The company offers extensive support and aftermarket services, which is vital for maintaining customer satisfaction and fostering long-term relationships.
These competitive advantages collectively enable Weir Group PLC to navigate the complexities of the markets it serves more effectively than many of its competitors.
Weir Group PLC, a global engineering company known for its mining and oil & gas equipment and services, faces several risks and challenges in the near future:
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Market Volatility: The demand for Weir’s products is closely tied to global commodity prices. Fluctuations in prices for oil, gas, and minerals can significantly affect revenue, leading to volatile earnings.
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Supply Chain Disruptions: Ongoing global supply chain issues, exacerbated by the COVID-19 pandemic and geopolitical tensions, can impact production and delivery schedules, leading to increased costs and potential lost sales.
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Regulatory Changes: Changes in environmental regulations and mining policies, particularly in regions where Weir operates, could impose additional costs or restrict operations.
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Technological Disruption: The engineering and manufacturing sectors are undergoing rapid technological changes, including digitalization and automation. Failure to adapt to these changes could result in decreased competitiveness.
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Geopolitical Risks: Operating in various regions exposes Weir to geopolitical risks, including changes in government policies, trade tariffs, and political instability, which can affect operations and market access.
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Competition: The engineering sector is competitive, with both established players and new entrants. Weir must consistently innovate to maintain its market share and fend off competition.
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Talent Acquisition and Retention: Attracting and retaining skilled employees is critical for maintaining operational efficiency and driving innovation. A tight labor market can make this a challenging task.
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Sustainability Pressures: Increasing pressure from stakeholders to demonstrate sustainable practices requires ongoing investment in environmentally-friendly technologies and processes, which may strain financial resources.
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Economic Uncertainty: Global economic conditions, including inflation rates, interest rates, and economic growth projections, can impact customer budgets and investment decisions in capital expenditures related to mining and oil & gas sectors.
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Foreign Exchange Risks: As an international company, Weir is exposed to foreign exchange fluctuations that can impact profitability and cash flows.
These challenges require strategic risk management and potentially adaptive business models to navigate successfully.
Revenue & Expenses Breakdown
Weir Group PLC
Balance Sheet Decomposition
Weir Group PLC
Current Assets | 1.9B |
Cash & Short-Term Investments | 651.9m |
Receivables | 594m |
Other Current Assets | 620.1m |
Non-Current Assets | 2B |
Long-Term Investments | 12.9m |
PP&E | 504.4m |
Intangibles | 1.3B |
Other Non-Current Assets | 174.5m |
Current Liabilities | 902m |
Accounts Payable | 543.1m |
Short-Term Debt | 280.3m |
Other Current Liabilities | 78.6m |
Non-Current Liabilities | 1.2B |
Long-Term Debt | 1.1B |
Other Non-Current Liabilities | 142.2m |
Earnings Waterfall
Weir Group PLC
Revenue
|
2.5B
GBP
|
Cost of Revenue
|
-1.6B
GBP
|
Gross Profit
|
989.3m
GBP
|
Operating Expenses
|
-554.2m
GBP
|
Operating Income
|
435.1m
GBP
|
Other Expenses
|
-216.3m
GBP
|
Net Income
|
218.8m
GBP
|
Free Cash Flow Analysis
Weir Group PLC
GBP | |
Free Cash Flow | GBP |
Weir Group's first half of 2023 showed a resilient and strengthening performance, with aftermarket revenues increasing by 12% and a notably improved cash conversion. A strong focus on operational efficiency contributed to an 80 basis points expansion in operating margins and a significant 390 basis points rise in return on capital employed, reaching 16.3%. Total revenue grew by 16% to GBP 1.3 billion, due to robust order execution and favorable pricing, leading to a 22% rise in operating profit to GBP 212 million. Given these results, Weir is confidently upgrading its full-year revenue and profit guidance and expects to maintain a full-year cash conversion rate of 80% to 90%.
What is Earnings Call?
WEIR Profitability Score
Profitability Due Diligence
Weir Group PLC's profitability score is 57/100. The higher the profitability score, the more profitable the company is.
Score
Weir Group PLC's profitability score is 57/100. The higher the profitability score, the more profitable the company is.
WEIR Solvency Score
Solvency Due Diligence
Weir Group PLC's solvency score is 53/100. The higher the solvency score, the more solvent the company is.
Score
Weir Group PLC's solvency score is 53/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
WEIR Price Targets Summary
Weir Group PLC
According to Wall Street analysts, the average 1-year price target for WEIR is 2 350.53 GBX with a low forecast of 1 949.3 GBX and a high forecast of 2 698.5 GBX.
Dividends
Current shareholder yield for WEIR is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Profile
Country
Industry
Market Cap
Dividend Yield
Description
The Weir Group Plc engages in the provision of engineering solutions. The firm's business operates through two segments: Minerals and ESCO. The Minerals segment is engaged in the provision of slurry handling equipment and associated aftermarket support for abrasive high wear applications used in the mining markets. The ESCO segment provides ground engaging tools (GET) for surface mining and infrastructure. The firm also provides engineered GET solutions to infrastructure markets, including construction, dredging and sand and aggregates. Its brands include Warman, Geho, Enduron, Linatex, Cavex and Nemisys.
Contact
IPO
Employees
Officers
The intrinsic value of one WEIR stock under the Base Case scenario is 2 419.54 GBX.
Compared to the current market price of 2 136 GBX, Weir Group PLC is Undervalued by 12%.