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1. Company Snapshot

1.a. Company Description

Kainos Group plc provides digital technology services in the United Kingdom.It operates through two divisions, Digital Services and Workday Practice.The Digital Services division includes lifecycle development of customized digital services for public, commercial sectors, and healthcare organizations.


The Workday Practice division provides consulting, project management, integration, and post deployment services for Workday's software suite, which includes cloud-based software for human capital management, and financial management and planning that enables enterprises to organize their staff and to support financial reporting requirements.This division also offers Smart test and audit, a proprietary software.The company also engages in the property business.


Kainos Group plc was founded in 1986 and is headquartered in Belfast, the United Kingdom.

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1.b. Last Insights on KNOS

Kainos Group plc's recent struggles can be attributed to concerns over its slowing growth momentum. The company's latest earnings release revealed a decline in operating margins, which may have spooked investors. Additionally, the company's dependence on a few large contracts may be weighing on its valuation. Furthermore, the company's high valuation multiples, with a price-to-earnings ratio of 34.6, according to Refinitiv, may be making investors cautious.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.07%)

6. Segments

Digital Services

Expected Growth: 8%

Kainos Group's Digital Services segment growth is driven by increasing demand for cloud-based solutions, digital transformation, and IT modernization. The company's expertise in Workday, Microsoft, and Google Cloud platforms, as well as its strong partnerships, contribute to its success. Additionally, the growing need for cybersecurity, data analytics, and AI-powered solutions fuels the segment's growth.

Workday Services

Expected Growth: 6%

Kainos Group's Workday Services segment growth is driven by increasing demand for digital transformation, cloud-based HR solutions, and strategic partnerships. The company's expertise in Workday implementation, coupled with its strong relationships with clients, contributes to its growth. Additionally, the rising need for organizations to streamline their HR processes and improve employee experience fuels the segment's 6% growth.

Workday Products

Expected Growth: 5%

Kainos Group plc's 5% growth in Workday Products is driven by increasing demand for cloud-based HR and financial management solutions, expansion into new geographies, and strategic partnerships. Additionally, the company's expertise in Workday implementation and integration, as well as its strong relationships with clients, contribute to its growth momentum.

7. Detailed Products

WorkSmart

A digital workflow management platform designed to help organizations streamline and automate business processes

Evolve

A integrated electronic health record (EHR) system for healthcare providers to manage patient data and clinical workflows

Smart

A cloud-based platform for building, deploying, and managing digital services for government and public sector organizations

Improve

A data analytics and insights platform to help organizations make data-driven decisions and improve operational efficiency

Kainos Academy

A training and development program for IT professionals to upskill and reskill in digital technologies

8. Kainos Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Kainos Group plc operates in a niche market, providing digital services and solutions. While there are substitutes available, they are not easily accessible, and the company's expertise and reputation act as a barrier to entry.

Bargaining Power Of Customers

Kainos Group plc's customers are primarily large enterprises and government agencies, which have limited bargaining power due to the company's specialized services and expertise.

Bargaining Power Of Suppliers

Kainos Group plc has a diverse supplier base, and the company's scale and reputation give it bargaining power over its suppliers.

Threat Of New Entrants

The digital services market has high barriers to entry, including the need for specialized skills and expertise. Kainos Group plc's established reputation and customer base also act as a barrier to entry.

Intensity Of Rivalry

The digital services market is competitive, but Kainos Group plc's niche focus and expertise help to differentiate it from competitors. The company's strong reputation and customer relationships also help to mitigate the impact of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 3.62%
Debt Cost 6.93%
Equity Weight 96.38%
Equity Cost 7.51%
WACC 7.49%
Leverage 3.76%

11. Quality Control: Kainos Group plc passed 8 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
Kainos

A-Score: 5.0/10

Value: 2.0

Growth: 7.0

Quality: 7.8

Yield: 3.8

Momentum: 7.0

Volatility: 2.3

1-Year Total Return ->

Stock-Card
GB Group

A-Score: 4.2/10

Value: 4.3

Growth: 3.6

Quality: 6.3

Yield: 1.9

Momentum: 6.0

Volatility: 3.3

1-Year Total Return ->

Stock-Card
IDOX

A-Score: 3.7/10

Value: 2.2

Growth: 5.0

Quality: 7.4

Yield: 1.2

Momentum: 3.0

Volatility: 3.3

1-Year Total Return ->

Stock-Card
IQGeo

A-Score: 3.1/10

Value: 0.2

Growth: 7.8

Quality: 4.6

Yield: 0.0

Momentum: 4.0

Volatility: 2.0

1-Year Total Return ->

Stock-Card
Trustpilot

A-Score: 3.0/10

Value: 0.7

Growth: 7.1

Quality: 4.4

Yield: 0.0

Momentum: 4.0

Volatility: 1.7

1-Year Total Return ->

Stock-Card
Volue

A-Score: 2.6/10

Value: 0.9

Growth: 5.6

Quality: 4.5

Yield: 0.0

Momentum: 4.0

Volatility: 0.7

1-Year Total Return ->

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

10.83$

Current Price

10.83$

Potential

-0.00%

Expected Cash-Flows