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1. Company Snapshot

1.a. Company Description

Chemring Group PLC supplies countermeasures, sensors, and energetic solutions to aerospace, defense, and security industries in the United States, the United Kingdom, Norway, Australia, and internationally.The company operates through two segments, Sensors & Information and Countermeasures & Energetics.The Sensors & Information segment develops and manufactures explosive hazard detection equipment; chemical and biological threat detection equipment; and electronic countermeasures, as well as network protection technologies.


The Countermeasures & Energetics segment offers expendable countermeasures for air, sea, and land platforms; cartridge/propellant actuated devices; pyrotechnic devices for satellite launch and deployment; missile components; separation sub-systems; actuators; and energetic materials, as well as aircrew egress and safety systems.Chemring Group PLC was incorporated in 1905 and is headquartered in Romsey, the United Kingdom.

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1.b. Last Insights on CHG

Chemring Group PLC's recent performance was driven by a 7.5% gain in its share price, partly due to institutional investors' substantial holdings, implying significant influence over the company. The company's full-year 2024 earnings results showed revenue growth of 8.0% to £510.4m, beating expectations. Additionally, Chemring Group announced a dividend increase to £0.052, indicating a positive development for shareholders. Furthermore, the company's recent takeover approach with a £1bn valuation highlights its attractive value proposition, which may attract new investors and boost the stock's performance.

1.c. Company Highlights

2. Chemring's Solid Performance Amidst Short-Term Headwinds

Chemring's financial performance for the full-year 2025 was marked by a 2% increase in revenue to £498 million, with an operating margin of 14.8%, up from 14.3% in the previous year. Earnings per share were 19.4p, and cash conversion rose to 114%. The company's record order book of £1.3 billion, up 32% year-on-year, is a testament to the sustained upcycle in defense and security investment. According to James Mortensen, the company's Countermeasures & Energetics segment delivered exceptional results, with record order books and revenues.

Publication Date: Dec -20

📋 Highlights
  • Record Order Book Growth: Chemring's order book reached £1.3 billion, up 32% YoY, driven by global defense spending trends.
  • Financial Performance: Revenue rose 2% to £498 million, with operating margin increasing to 14.8% and EPS at 19.4p.
  • ESG Progress: Total recordable injury frequency rate fell to 0.48, down 30% from 0.69, reflecting safety improvements.
  • Strategic Growth Targets: Aiming to double annual revenue to £1 billion by 2030 through organic growth and M&A, supported by a 76% FY '26 revenue order cover.
  • U.S. Sensors Expansion: JBTDS, the sole U.S. government supplier, anticipates full-rate production in '26 after a fallow year in '25.

Segmental Performance

The Sensors & Information segment faced a weaker period due to delays in U.K. government spending, but the company maintained operating margins of nearly 18%. The order book grew 5% year-on-year, with 45% order cover for FY '26. Roke secured GBP 65 million worth of contract renewals from national security customers, and the company launched new products, including the DECEIVE EW detection and attack system and CORTEXA, the counter-drone system.

Outlook and Growth Prospects

The company expects low double-digit growth in Countermeasures & Energetics and mid-double-digit growth in Sensors & Information. Chemring remains confident in its ability to deliver superior and sustainable shareholder value over the longer term, driven by its strong market positions, diversified portfolio, and exposure to structural tailwinds. The company's strategy is focused on growing, accelerating, and protecting its business, with a target to double annual revenue to £1 billion by 2030 while maintaining strong margins.

Valuation and Dividend

With a P/E Ratio of 26.14 and an EV/EBITDA of 13.4, the market appears to have priced in Chemring's growth prospects. The company's dividend yield stands at 1.7%, with a total dividend of 8p, up 3%. The actual EPS of 19.4p beat estimates, and analysts estimate next year's revenue growth at 10.1%. The company's net debt was £89 million, representing 0.95x leverage, and the board is confident in achieving its ambition of EUR 1 billion annual revenue by 2030.

3. NewsRoom

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How A New Price Target Is Shaping The Evolving Story For Chemring Group (LSE:CHG)

Jan -22

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FTSE and European stock market winners and losers a year into Trump's second term

Jan -20

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European Small Caps With Insider Activity To Watch In January 2026

Jan -15

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Chemring Group (LON:CHG) Is Paying Out A Larger Dividend Than Last Year

Jan -14

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Chemring Group PLC's (LON:CHG) Fundamentals Look Pretty Strong: Could The Market Be Wrong About The Stock?

Jan -01

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Insider Activity Highlights 3 Undervalued Small Caps In European Markets

Dec -16

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Chemring Group PLC (CMGMF) Full Year 2025 Earnings Call Highlights: Record Order Book and ...

Dec -15

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European Defense Stocks Fall as U.S. Pressures Ukraine to Accept Peace Deal

Nov -24

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.58%)

6. Segments

Countermeasures and Energetics

Expected Growth: 8%

Countermeasures and Energetics from Chemring Group PLC is driven by increasing demand for counter-IED systems, growing threat of terrorism and asymmetric warfare, and rising expenditure on defense and security. Additionally, advancements in energetics technology and expanding presence in emerging markets contribute to the 8% growth.

Sensors and Information

Expected Growth: 12%

Chemring Group PLC's 12% growth in Sensors and Information is driven by increasing demand for threat detection systems, expansion in the counter-IED market, and growing adoption of electronic warfare capabilities. Additionally, the company's strategic acquisitions and investments in R&D have enhanced its product offerings, contributing to the segment's growth.

7. Detailed Products

Countermeasures

Chemring Group PLC provides a range of countermeasures designed to protect aircraft, vehicles, and ships from missile threats.

Sensors and Electronic Warfare

The company offers a range of sensors and electronic warfare systems for military and security applications.

Pyrotechnic Devices

Chemring Group PLC manufactures a range of pyrotechnic devices, including flares, illuminators, and smoke signals.

Munitions and Energetics

The company provides a range of munitions and energetics, including propellants, explosives, and pyrotechnic compositions.

R&D and Manufacturing Services

Chemring Group PLC offers research and development, and manufacturing services for defense and security applications.

8. Chemring Group PLC's Porter Forces

Forces Ranking

Threat Of Substitutes

Chemring Group PLC operates in a niche market with limited substitutes, but the threat of substitutes is still present due to the evolving nature of the defense industry.

Bargaining Power Of Customers

Chemring Group PLC's customers are primarily government agencies and defense contractors, which have limited bargaining power due to the specialized nature of the products and services offered.

Bargaining Power Of Suppliers

Chemring Group PLC relies on a diverse supplier base, which reduces the bargaining power of individual suppliers. However, the company is still vulnerable to supply chain disruptions and price fluctuations.

Threat Of New Entrants

The defense industry is highly regulated, and the barriers to entry are high, making it difficult for new entrants to compete with established players like Chemring Group PLC.

Intensity Of Rivalry

The defense industry is highly competitive, with several established players competing for a share of the market. Chemring Group PLC faces intense rivalry from companies like Lockheed Martin, Raytheon, and Northrop Grumman.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 5.19%
Debt Cost 7.35%
Equity Weight 94.81%
Equity Cost 7.37%
WACC 7.37%
Leverage 5.47%

11. Quality Control: Chemring Group PLC passed 3 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
Chemring

A-Score: 5.5/10

Value: 4.2

Growth: 5.2

Quality: 6.4

Yield: 3.1

Momentum: 8.5

Volatility: 5.3

1-Year Total Return ->

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Stock-Card
Cohort

A-Score: 5.1/10

Value: 4.1

Growth: 7.9

Quality: 5.8

Yield: 3.1

Momentum: 8.0

Volatility: 1.3

1-Year Total Return ->

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Stock-Card
TAT Technologies

A-Score: 4.2/10

Value: 3.7

Growth: 5.2

Quality: 5.6

Yield: 0.0

Momentum: 9.5

Volatility: 1.0

1-Year Total Return ->

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Avio

A-Score: 4.0/10

Value: 1.4

Growth: 6.2

Quality: 4.1

Yield: 1.2

Momentum: 10.0

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
OHB

A-Score: 3.4/10

Value: 1.2

Growth: 4.2

Quality: 2.5

Yield: 1.9

Momentum: 10.0

Volatility: 0.3

1-Year Total Return ->

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Stock-Card
CTT Systems

A-Score: 3.3/10

Value: 0.2

Growth: 5.9

Quality: 8.7

Yield: 3.1

Momentum: 0.5

Volatility: 1.3

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

5.1$

Current Price

5.1$

Potential

-0.00%

Expected Cash-Flows