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1. Company Snapshot

1.a. Company Description

Tracsis plc, together with its subsidiaries, provides software and hardware products, and consultancy services for the rail industry.The company operates in two segments, Rail Technology and Services; and Data, Analytics, Consultancy & Events.The Rail Technology & Services segment provides a suite of operational software products covering timetabling, resource and rolling stock planning and optimization, real time performance and control, service recovery, retail services, incident management, retail services, and asset management; and infrastructure software services that include safety management, planning and delivery of work, remote condition monitoring and data acquisition, and asset virtualization/intelligent infrastructure/digital railway.


This segment also offers transit and ticketing solutions, including passenger analytics, retail operations, and delay repay.The Data, Analytics, Consultancy & Events segment provides informatics and location analytics, which include geographical information systems, data visualization and analytics platforms, and asset management; transport data and analytics, such as passenger/traffic data collection, and traffic insights covering data visualization and data-as-a-service; and event traffic management solutions, such as event transport planning and traffic management, and integrated traffic data management and event access control.It serves transport operators, transport authorities, infrastructure operators, government agencies and local authorities, as well as event organizers in the United Kingdom, Ireland, rest of Europe, North America, and internationally.


The company was incorporated in 2004 and is headquartered in Leeds, the United Kingdom.

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1.b. Last Insights on TRCS

Tracsis plc faced challenges due to unfavorable market conditions, as evident from the FTSE 100's slight decline and mixed European stocks ahead of Nvidia's results. The company's undervaluation, with a projected fair value of UK£5.69, may have raised concerns among investors. Although there is no recent earnings release available, the lack of positive momentum in the market and potential overhang on the stock's valuation could have weighed on investor sentiment. No information on share buybacks or new product launches was found.

1.c. Company Highlights

2. Tracsis' FY '25 Results: A Step in the Right Direction

Tracsis reported a 1% year-over-year revenue growth to £81.9 million, driven by an 8% increase in recurring and transactional revenues. However, adjusted EBITDA was £12.6 million, slightly lower than the prior year, due to headwinds from Control Period 7 funding and lower profitability in Traffic Data & Events. The company's EPS came in at 0.03217, significantly below estimates of 0.209. Despite this, the group's balance sheet remained strong, with a cash balance of £23.4 million and a healthy improvement in free cash flow generation.

Publication Date: Nov -24

📋 Highlights
  • Revenue Growth and Recurring Revenues:: Revenue increased 1% YoY to £81.9M, driven by 8% growth in recurring and transactional revenues.
  • Adjusted EBITDA Performance:: Adjusted EBITDA declined to £12.6M (-£1.5M YoY) due to Control Period 7 funding constraints and lower Traffic Data & Events profitability.
  • Balance Sheet Strength:: Free cash flow improved, ending with £23.4M cash reserves and a robust financial position to support growth initiatives.
  • Strategic Focus on International Expansion:: Prioritizing rail markets abroad, leveraging SaaS-native products like digital ticketing and Remote Condition Monitoring.
  • Future Growth Drivers:: 3-year plan targets increased pay-as-you-go (PAYG) revenue contribution, with a balanced capital framework for M&A and shareholder returns.

Financial Performance Highlights

The company's financial performance improved in the second half, with a stronger trading performance and a healthy balance sheet. The improvement in free cash flow generation is a positive sign, and the cash balance provides a solid foundation for future investments. As David Frost, CEO, noted, "Our financial performance in the second half of FY '25 has improved, and our expectations for FY '26 remain unchanged."

Strategic Focus and Growth Opportunities

Tracsis is focused on long-term growth and sustainability, with a clear pathway for expansion into new markets and adjacencies. The company has identified four transformation factors for growth: focusing on core markets, investing in roadmaps for SaaS-native products, targeting international growth, and M&A to support organic growth. With a strong balance sheet and a healthy M&A pipeline, Tracsis is well-positioned to pursue opportunities that align with its strategic direction.

Valuation and Outlook

With a P/E Ratio of 201.22 and an EV/EBITDA of 9.59, the market appears to be pricing in significant growth expectations. Analysts estimate next year's revenue growth at 1.2%, which may be a conservative estimate given Tracsis' strong fundamentals and growth opportunities. The company's ROIC of 3.45% and ROE of 0.76% indicate room for improvement, but the healthy balance sheet and cash flow generation provide a solid foundation for future growth.

Conclusion on Growth Prospects

Tracsis is prioritizing near-term delivery while building for an exciting future, with a clear capital allocation framework and a focus on organic growth, M&A, and returns to shareholders. The company's rich IP, deep domain expertise, and healthy balance sheet position it for long-term success, and we can expect to see continued progress in the coming years.

3. NewsRoom

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Tracsis plc's (LON:TRCS) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?

Nov -22

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Is There An Opportunity With Tracsis plc's (LON:TRCS) 31% Undervaluation?

Oct -02

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FTSE 100 ends slightly lower and European stocks mixed ahead of Nvidia results

Aug -27

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Tracsis plc's (LON:TRCS) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

May -19

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Tracsis First Half 2025 Earnings: UK£0.015 loss per share (vs UK£0.016 loss in 1H 2024)

Apr -28

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Tracsis PLC (LSE:TRCS) (Q1 2025) Earnings Call Highlights: Strategic Growth Amidst Challenges

Apr -26

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Are Investors Undervaluing Tracsis plc (LON:TRCS) By 49%?

Apr -25

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Tracsis secures Tap Converter PAYG system contract in UK

Feb -20

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.93%)

6. Segments

Data, Analytics, Consultancy & Events

Expected Growth: 5%

Tracsis plc's 5% growth is driven by increasing demand for data-driven insights, expansion of analytics capabilities, strategic consultancy services, and hosting of industry-specific events. The company's expertise in rail, traffic, and transportation data analysis, coupled with its ability to provide actionable insights, fuels growth in the Data segment. The Analytics segment benefits from the development of new software tools and services. The Consultancy segment grows through strategic partnerships and acquisitions, while the Events segment expands through hosting of conferences and workshops, fostering industry connections and thought leadership.

Rail Technology & Services

Expected Growth: 7%

Tracsis plc's Rail Technology & Services segment growth is driven by increasing demand for rail network optimization, government investments in rail infrastructure, and adoption of digital technologies such as AI and IoT. Additionally, the need for improved safety, efficiency, and passenger experience is fueling growth. The segment's strong order book and strategic acquisitions are also contributing to its 7% growth.

7. Detailed Products

Traffic Management

Tracsis provides traffic management solutions to help manage and optimize traffic flow, reducing congestion and improving journey times.

Rail Consultancy

Tracsis offers rail consultancy services, providing expert advice on rail operations, timetabling, and resource planning.

Data Analytics

Tracsis provides data analytics services, helping clients to extract insights from their data and make informed decisions.

Transportation Planning

Tracsis offers transportation planning services, helping clients to develop and implement effective transportation strategies.

Software Solutions

Tracsis develops and provides software solutions for the transportation industry, including traffic management and rail planning tools.

8. Tracsis plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Tracsis plc operates in a niche market, providing software and services to the transportation industry. While there are some substitutes available, they are not as comprehensive as Tracsis' offerings, reducing the threat of substitutes.

Bargaining Power Of Customers

Tracsis plc's customers are primarily transportation companies and government agencies, which have limited bargaining power due to the specialized nature of Tracsis' services.

Bargaining Power Of Suppliers

Tracsis plc has a diverse supplier base, and the company is not heavily reliant on any single supplier, reducing the bargaining power of suppliers.

Threat Of New Entrants

The transportation software and services market has high barriers to entry, including significant capital requirements and the need for specialized expertise, reducing the threat of new entrants.

Intensity Of Rivalry

The transportation software and services market is moderately competitive, with a few established players, including Tracsis plc. While there is some rivalry, the market is not overly competitive, and Tracsis plc has a strong market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 2.99%
Debt Cost 4.67%
Equity Weight 97.01%
Equity Cost 7.61%
WACC 7.52%
Leverage 3.08%

11. Quality Control: Tracsis plc passed 6 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

Stock-Card
IVU Traffic Technologies

A-Score: 5.2/10

Value: 2.7

Growth: 5.0

Quality: 7.6

Yield: 1.9

Momentum: 8.5

Volatility: 5.7

1-Year Total Return ->

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Lectra

A-Score: 4.2/10

Value: 4.2

Growth: 5.8

Quality: 6.5

Yield: 1.9

Momentum: 2.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Smart Eye

A-Score: 4.1/10

Value: 6.8

Growth: 4.6

Quality: 4.9

Yield: 0.0

Momentum: 7.5

Volatility: 1.0

1-Year Total Return ->

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Lime Technologies

A-Score: 3.8/10

Value: 0.9

Growth: 8.2

Quality: 7.3

Yield: 1.2

Momentum: 3.0

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
PensionBee

A-Score: 3.3/10

Value: 4.0

Growth: 7.9

Quality: 3.2

Yield: 0.0

Momentum: 2.0

Volatility: 3.0

1-Year Total Return ->

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Stock-Card
Tracsis

A-Score: 2.9/10

Value: 4.8

Growth: 3.9

Quality: 5.2

Yield: 0.6

Momentum: 1.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.35$

Current Price

3.35$

Potential

-0.00%

Expected Cash-Flows