G4S Shares Significantly Undervalued

G4S is a multinational security services company and constituent of the FTSE 250 Index - and equity analysts think it is trading at significantly below fair value

Morningstar Equity Analysts 18 February, 2019 | 12:11PM

G4S security firm equity analysis competitive advantage prison service

G4S (GFS) is the largest security provider in the world, with estimated market share of around 12% in a highly fragmented market. Its primary business activities centre around providing manned and mobile guarding, security systems, and cash-management services. The company also provides outsourcing services for governments, such as back-office systems for police services, employment support services, and even the management of entire prisons.

Having spent several years at the beginning of the decade overextending itself into areas removed from its core competencies, G4S is now focused on its primary businesses and driving revenue and margin growth through upselling to its clients and providing more value-add services. Examples of this can be seen in “Cash 360”, a program in which G4S effectively assumes the back-office functions for retailers, recycling cash within their business, thus reducing the need for external collection and counting services, as well as working-capital requirements.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
G4S PLC69.92 GBX-24.26

About Author

Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.

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