Serco Group (LON:SRP) Releases Earnings Results

Serco Group (LON:SRP) posted its earnings results on Thursday. The company reported GBX 9.69 EPS for the quarter, Digital Look Earnings reports. Serco Group had a return on equity of 16.69% and a net margin of 2.97%.

Here are the key takeaways from Serco Group’s conference call:

• Strong first-half performance: Revenue rose 4% on a constant-currency basis to £2.5 billion, underlying operating profit increased 8% to £157 million, and margin reached a 10-year high of 6.2%. Free cash flow was £65 million, with management reiterating full-year revenue, profit, and cash-flow guidance.
• Serco increased its 2026 share buyback to £150 million, including an additional £75 million for the second half, taking total expected shareholder returns for the year to just under £200 million. Leverage remained low at 0.7x EBITDA, preserving capacity for acquisitions and further returns.
• Growth prospects remain supported by a record £12.8 billion group pipeline, retention above 95%, and strong defence momentum, including 10% organic growth across the defence business. North America’s pipeline exceeded £8 billion, while the U.K. and Europe benefited from a 30% increase in defence revenue and successful contract mobilizations.
• Asia-Pacific revenue fell 14% following the exit from the Australian immigration contract, while Middle East revenue declined 25% amid regional conflict and contract transitions. U.K. and European immigration volumes also remain a headwind, although management said the impact is currently smaller than previously expected.
• Procurement delays continue to affect the timing of U.S. federal awards, with £3.2 billion of bids awaiting decisions and midterm elections approaching in November. Management expects conditions to improve gradually but emphasized that its 2026 guidance does not depend on a recovery in the U.S. procurement cycle.

Serco Group Price Performance

Shares of LON:SRP opened at GBX 265.80 on Friday. The company has a quick ratio of 0.98, a current ratio of 0.93 and a debt-to-equity ratio of 104.09. The stock has a market capitalization of £2.60 billion, a PE ratio of 18.89, a price-to-earnings-growth ratio of 3.06 and a beta of 0.50. The firm’s 50 day moving average price is GBX 239.38 and its 200-day moving average price is GBX 274.96. Serco Group has a twelve month low of GBX 212.80 and a twelve month high of GBX 325.80.

Analyst Upgrades and Downgrades

Several research firms have issued reports on SRP. Deutsche Bank Aktiengesellschaft restated a “hold” rating and set a GBX 255 target price on shares of Serco Group in a research note on Friday, June 26th. Citigroup boosted their price objective on shares of Serco Group from GBX 371 to GBX 372 and gave the company a “buy” rating in a report on Friday. Berenberg Bank restated a “buy” rating and set a GBX 350 price objective on shares of Serco Group in a research report on Friday. Finally, Jefferies Financial Group restated a “hold” rating and set a GBX 230 price objective on shares of Serco Group in a research report on Thursday, June 25th. Two analysts have rated the stock with a Buy rating and two have given a Hold rating to the stock. Based on data from MarketBeat, Serco Group presently has an average rating of “Moderate Buy” and a consensus price target of GBX 301.75.

About Serco Group