RWS Holdings plc (RWS.L) | Investment Case

1. Company Snapshot

1.a. Company Description

RWS Holdings plc provides technology-enabled language, content management, and intellectual property (IP) services.It operates through four segments: Language Services, Regulated Industries, IP Services, and Language and Content Technology.The Language Services segment provides language services and helps clients to create, translate, and deliver content in approximately 250 languages.

The Regulated Industries segment offers a full suite of language services, including language solutions for clinical trial management, linguistic validation of clinical outcomes assessments, insurance, retail, commercial and investment banking, compliance, mergers and acquisitions, and litigation services.The IP Services segment provides patent translation and filing services, as well as a range of IP search services.The Language and Content Technology segment offers language technology and artificial intelligence solutions that enables enterprises to create, manage, translate, and automate content in various languages; and content management technology support services.

It serves automotive, energy, retail and e-commerce, legal, travel and hospitality, leisure, finance, industrial and manufacturing, life sciences, high-tech software, chemical, media, aerospace and defense, managed care, telecom, and government sectors.The company primarily operates in the United Kingdom, the United States, Continental Europe, and internationally.RWS Holdings plc was founded in 1958 and is headquartered in Chalfont St Peter, the United Kingdom.

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1.b. Last Insights on RWS

RWS Holdings' recent performance has been impacted by uncertainties in revenue growth forecasts, prompting analysts to revise their outlooks and adjust price targets. The company's fair value estimate has decreased from £1.88 to £1.82 per share. Revenue growth expectations have been trimmed, and the discount rate has edged higher. Despite this, the company has made strategic appointments, such as Michael Wayne as Head of Media and Entertainment, to drive growth in AI-powered media localization. Additionally, RWS has achieved a milestone of translating one trillion words in the past year through its language technology platform.

1.c. Company Highlights

Last Price	80.1
Change Percentage	2.56%
Open	80
Previous Close	78.1
Market Cap ( Millions)	296
Volume	1563385
Year High	188
Year Low	60.8
M A 50	82.05
M A 200	90.47

FCF Yield	24.37%
Dividend Yield	15.54%
ROE	2.84%
Debt / Equity	13.81%
Net Debt / EBIDTA	49.08%
Price To Book	0.34
Price Earnings Ratio	11.63
Price To FCF	4.1
Price To sales	0.42
EV / EBITDA	3.36

2. Transcript Summary

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3. NewsRoom

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How Recent Developments Are Rewriting the Story for RWS Holdings

Nov -26

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Why The Narrative Around RWS Holdings Is Shifting After Recent Financial and Leadership Changes

Nov -12

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.60%)

6. Segments

Language Services

Expected Growth: 9%

RWS Holdings plc's Language Services segment growth is driven by increasing demand for translation and localization services, fueled by globalization, digitalization, and the rise of e-commerce. Additionally, the segment benefits from the company's strong brand reputation, strategic acquisitions, and investments in technology, enabling it to capitalize on emerging trends such as AI-powered translation and machine learning.

Regulated Industries

Expected Growth: 7%

RWS Holdings plc's Regulated Industries segment growth is driven by increasing demand for language services in highly regulated industries such as pharmaceuticals, aerospace, and automotive. Growing need for compliance, expanding global reach, and rising complexity of regulatory requirements fuel this growth. Additionally, the segment benefits from RWS's expertise in providing specialized translation and localization solutions, enabling clients to navigate complex regulatory environments.

Language and Content Technology

Expected Growth: 10%

RWS Holdings plc's Language and Content Technology segment growth is driven by increasing demand for digital content, rising adoption of artificial intelligence and machine learning in translation, and growing need for localization and globalization services. Additionally, the segment benefits from the company's strategic acquisitions, expanding customer base, and innovative product offerings.

Intellectual Property Services

Expected Growth: 8%

RWS Holdings plc's Intellectual Property Services segment growth is driven by increasing demand for patent translation and filing services, expansion into new markets, and strategic acquisitions. Additionally, the rise of innovation and R&D investments globally, particularly in the technology and life sciences sectors, fuels growth. Furthermore, the company's expertise in AI-powered patent search and analytics solutions enhances its competitive position.

7. Detailed Products

Translation and Localization

RWS offers translation and localization services to help businesses expand globally, including document translation, website localization, and software localization.

Intellectual Property (IP) Services

RWS provides IP services, including patent translation, patent filing, and patent search, to help companies protect their intellectual property.

Life Sciences Language Solutions

RWS offers language solutions specifically designed for the life sciences industry, including translation, localization, and linguistic validation.

Content Management and Automation

RWS provides content management and automation solutions to help businesses streamline their content creation, translation, and delivery processes.

Language Technology and Tools

RWS offers language technology and tools, including machine translation, terminology management, and language analytics.

8. RWS Holdings plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for RWS Holdings plc is medium due to the presence of alternative language service providers, but the company's strong brand reputation and high-quality services mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low for RWS Holdings plc due to the company's diversified customer base and lack of dependence on a single customer.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for RWS Holdings plc due to the presence of multiple suppliers, but the company's large scale of operations gives it some negotiating power.

Threat Of New Entrants

The threat of new entrants is low for RWS Holdings plc due to the high barriers to entry in the language services industry, including the need for specialized skills and technology.

Intensity Of Rivalry

The intensity of rivalry is high for RWS Holdings plc due to the presence of several established players in the language services industry, leading to intense competition for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	5.95%
Debt Cost	3.95%
Equity Weight	94.05%
Equity Cost	7.72%
WACC	7.49%
Leverage	6.33%

11. Quality Control: RWS Holdings plc passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

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

Begbies Traynor

A-Score: 6.5/10

Value: 4.4

Growth: 8.0

Quality: 6.1

Yield: 5.6

Momentum: 9.0

Volatility: 5.7

1-Year Total Return ->

Talenom

A-Score: 5.3/10

Value: 6.5

Growth: 6.2

Quality: 7.2

Yield: 5.0

Momentum: 3.0

Volatility: 4.0

1-Year Total Return ->

RWS

A-Score: 4.9/10

Value: 9.1

Growth: 5.0

Quality: 5.9

Yield: 8.1

Momentum: 0.0

Volatility: 1.0

1-Year Total Return ->

Green Landscaping

A-Score: 4.4/10

Value: 7.3

Growth: 9.1

Quality: 5.7

Yield: 0.0

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

Elanders

A-Score: 4.2/10

Value: 7.7

Growth: 5.1

Quality: 1.9

Yield: 8.1

Momentum: 0.0

Volatility: 2.7

1-Year Total Return ->

Franchise Brands

A-Score: 4.2/10

Value: 5.5

Growth: 6.6

Quality: 5.9

Yield: 2.5

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.86%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.49%

RWS Holdings plc - GB00BVFCZV34

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RWS

1.c. Company Highlights

Weak Momentum

Cheaper

Medium Volatility

More Volatile

Average Yield

Higher Growth

Higher Yield

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.60%)

6. Segments

Language Services

Expected Growth: 9%

Regulated Industries

Expected Growth: 7%

Language and Content Technology

Expected Growth: 10%

Intellectual Property Services

Expected Growth: 8%

7. Detailed Products

Translation and Localization

Intellectual Property (IP) Services

Life Sciences Language Solutions

Content Management and Automation

Language Technology and Tools

8. RWS Holdings 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: RWS Holdings 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

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.8$

Current Price

0.8$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA