Ricardo plc (RCDO.L) | Investment Case

1. Company Snapshot

1.a. Company Description

Ricardo plc provides engineering, technical, environmental, and strategic consultancy services for transportation original equipment manufacturers and operators, suppliers, energy companies, and government agencies.It operates through five segments: Energy & Environment (EE), Rail, Automotive and Industrial (A&I), Defense, and Performance Products (PP).The EE segment provides industry-leading analysis, advice, and data to governments, public agencies, and businesses.

The Rail segment offers technical advice and engineering services, and accredited assurance services.The A&I segment engages in the provision of clean, efficient, integrated propulsion, and energy solutions in area of hybrid and electric systems, electrification, engines, driveline and transmissions, testing, and vehicle engineering for automotive, aerospace, defense, energy, off-highway and commercial, marine, motorcycle and light-personal transport, and rail sectors.The Defense segment focuses on engineering services, software, and products that protect life and enhance the operation, maintenance, and support of complex systems, as well as offers various engineering programmes; and anti-lock braking system/electronic stability control systems.

The PP segment manufactures and assembles niche high-quality components, prototypes, and complex products, including engines, transmissions, and other precision and performance-critical products; and provides software solutions for motorsport, automotive, aerospace, defense, and rail markets.It operates in the United Kingdom, Europe, North America, China, Australia, rest of Asia, and internationally.The company was founded in 1915 and is headquartered in Shoreham-by-Sea, the United Kingdom.

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1.b. Last Insights on RCDO

Ricardo plc's recent performance has been hindered by a decline in revenue, with the company reporting a flat revenue of £169.1m in the first half of 2025, compared to the same period in 2024. Furthermore, the company's net loss has widened to £0.21 per share, up from £0.18 in the first half of 2024. Additionally, the company has announced a reduction in its dividend payout to £0.017, indicating a decrease in shareholder returns.

1.c. Company Highlights

Last Price	430
Change Percentage	0.23%
Open	430
Previous Close	429
Market Cap ( Millions)	268
Volume	449190
Year High	458
Year Low	206
M A 50	425.48
M A 200	339.9

FCF Yield	0.79%
Dividend Yield	2.47%
ROE	18.05%
Debt / Equity	84.02%
Net Debt / EBIDTA	97.97%
Price To Book	1.46
Price Earnings Ratio	8.52
Price To FCF	127.39
Price To sales	0.64
EV / EBITDA	7.75

2. Transcript Summary

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3. NewsRoom

WSP Reports Q3 2025 results

Nov -05

Source:

Form 8.3 - NCC Group Plc

Oct -09

Source:

WSP completes acquisition of Ricardo plc, a global strategic and engineering consultancy firm

Oct -09

Source:

Form 8.3 - Ricardo PLC

Oct -08

Source:

Form 8.3 - Ricardo PLC

Oct -07

Source:

Form 8.3 - Alphawave IP Group plc

Oct -06

Source:

Form 8.3 - Ricardo PLC

Oct -03

Source:

Form 8.3 - Ricardo PLC

Oct -02

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.85%)

6. Segments

Defense

Expected Growth: 2.5%

Ricardo plc's 2.5% growth in Defense segment is driven by increasing demand for cybersecurity solutions, growing adoption of electric and autonomous vehicles, and rising government spending on defense technology. Additionally, the company's strategic partnerships and acquisitions have expanded its capabilities, enabling it to capitalize on emerging trends in the defense industry.

Energy and Environment

Expected Growth: 2.8%

Ricardo plc's Energy and Environment segment growth of 2.8% is driven by increasing demand for low-carbon energy solutions, government policies promoting sustainable development, and rising investment in renewable energy sources. Additionally, growing concerns about climate change and air quality are driving demand for clean technologies and energy-efficient solutions.

Performance Products

Expected Growth: 3.2%

Ricardo plc's Performance Products segment growth of 3.2% is driven by increasing demand for electric and hybrid vehicles, stringent emissions regulations, and growing adoption of advanced driver-assistance systems (ADAS). Additionally, the company's strategic partnerships and investments in research and development have enabled it to capitalize on emerging trends in the automotive industry.

Automotive and Industrial - Emerging

Expected Growth: 3.5%

Ricardo plc's 3.5% growth in Automotive and Industrial is driven by increasing demand for electric vehicles, stringent emissions regulations, and growing adoption of autonomous driving technologies. Additionally, the industrial segment benefits from rising investments in renewable energy and electrification of industries, leading to increased demand for Ricardo's engineering and consulting services.

Rail

Expected Growth: 2.2%

Ricardo plc's Rail segment growth of 2.2% is driven by increasing demand for sustainable transportation, government investments in rail infrastructure, and rising adoption of digital signalling systems. Additionally, the company's expertise in electrification and autonomous technologies is contributing to its growth in the rail industry.

Automotive and Industrial - Established

Expected Growth: 2.8%

Ricardo plc's Automotive and Industrial segment growth of 2.8% is driven by increasing demand for electric and hybrid vehicles, stringent emissions regulations, and rising adoption of advanced technologies such as autonomous driving and connectivity. Additionally, growth in industrial markets, particularly in aerospace and defense, contributes to the segment's expansion.

7. Detailed Products

Auction Platform

Ricardo plc's auction platform provides a digital marketplace for buyers and sellers to trade goods and services.

E-Procurement Solutions

Ricardo plc's e-procurement solutions enable organizations to streamline their procurement processes, reducing costs and improving efficiency.

Consulting Services

Ricardo plc's consulting services provide expert advice and guidance on procurement, supply chain management, and auction strategy.

Asset Management

Ricardo plc's asset management services help organizations manage and dispose of surplus assets, including inventory management and valuation.

Insolvency Services

Ricardo plc's insolvency services provide support to insolvent companies, including asset valuation, disposal, and realization.

8. Ricardo plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Ricardo plc operates in a niche market with limited substitutes, but there are some alternatives available to customers.

Bargaining Power Of Customers

Ricardo plc's customers have limited bargaining power due to the specialized nature of the company's products and services.

Bargaining Power Of Suppliers

Ricardo plc's suppliers have some bargaining power due to the company's reliance on specialized components and services.

Threat Of New Entrants

The barriers to entry in Ricardo plc's market are relatively high, making it difficult for new entrants to compete.

Intensity Of Rivalry

Ricardo plc operates in a highly competitive market with several established players, leading to intense rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	40.03%
Debt Cost	3.95%
Equity Weight	59.97%
Equity Cost	6.77%
WACC	5.64%
Leverage	66.74%

11. Quality Control: Ricardo plc passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Science Group

A-Score: 7.0/10

Value: 6.4

Growth: 7.6

Quality: 8.7

Yield: 1.9

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

BTS Group

A-Score: 5.0/10

Value: 5.9

Growth: 7.4

Quality: 7.8

Yield: 4.4

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

Enento

A-Score: 4.9/10

Value: 4.1

Growth: 3.3

Quality: 5.4

Yield: 6.9

Momentum: 1.5

Volatility: 8.3

1-Year Total Return ->

Ricardo

A-Score: 4.2/10

Value: 5.9

Growth: 2.9

Quality: 5.0

Yield: 4.4

Momentum: 5.5

Volatility: 1.7

1-Year Total Return ->

Alpha FMC

A-Score: 3.7/10

Value: 1.7

Growth: 5.3

Quality: 7.0

Yield: 3.1

Momentum: 4.0

Volatility: 1.0

1-Year Total Return ->

Fintel

A-Score: 3.5/10

Value: 2.8

Growth: 3.1

Quality: 6.0

Yield: 2.5

Momentum: 3.0

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

4.55%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.64%

Ricardo plc - GB0007370074

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RCDO

1.c. Company Highlights

Lower Growth

Lower Quality

Weak Momentum

Less Volatile

Medium Volatility

Stable Momentum

Revenues Miss

More Volatile

Fairly Valued

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.85%)

6. Segments

Defense

Expected Growth: 2.5%

Energy and Environment

Expected Growth: 2.8%

Performance Products

Expected Growth: 3.2%

Automotive and Industrial - Emerging

Expected Growth: 3.5%

Rail

Expected Growth: 2.2%

Automotive and Industrial - Established

Expected Growth: 2.8%

7. Detailed Products

Auction Platform

E-Procurement Solutions

Consulting Services

Asset Management

Insolvency Services

8. Ricardo plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Ricardo plc passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.3$

Current Price

4.3$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA