gross margin
—
FY 2027
management framework
RS GROUP PLC
Last · LSE£7.90-0.03 (-0.38%)stale · yahoo · 46h ago
Market cap£3.6B457.8M sh
P/E · TTM23.2fwd 16.6 · eps 0.34
Beta0.87vs S&P 500
Div yield0.03%annual · TTM
52w range
£5.369£7.99
Volume37.3Ksession
| Revenue | £2.9B |
|---|---|
| Operating income | £238.6M |
| Net income | £161.8M |
| Free cash flow | £244.9M |
| Operating margin | 8.3% |
| Net margin | 5.6% |
| Return on equity | 11.4% |
| Period | 2026 |
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OpenFilings analyst
Our analyst
Agentic read of the latest earnings call — recommendation updates when we process a new transcript. Research synthesis, not investment advice.
Strong BuyBuyHoldSellStrong Sell
Strategic execution is improving, but earnings momentum and FY27 visibility remain insufficient for a buy.
Hold: RS Group delivered resilient execution but not yet a clean earnings reacceleration.
FY26 reported revenue fell 1% and like-for-like revenue was flat, with price up roughly 2% offset by volumes down 2.5%; cash conversion was strong at 109%, net debt fell to 1.0x EBITDA, and a £100m buyback supports downside. The bull case is improving momentum, RS Pro growth of 5%, solutions growth of 6% and 6% growth in corporate customers, but FY27 still carries heavy investment, Mexico remains a drag and the company gave no quantified revenue or profit outlook.
Themes
- Value Acceleration Plan
- Rs Pro
- Solutions Services
- Mexico
- Semiconductors
- Cost Investment
Near term
Q1 FY27 comparisons should remain difficult in Mexico; management expects the currency effect to remain a drag and capital projects depend on resolution of the North American trade agreement.
Group momentum improved from -0.6% in Q3 to -0.3% in Q4, but the exit rate is still negative rather than clearly demonstrating a recovery.
FY27 cost pressures include around 3% underlying cost inflation, £35m-£45m of organic investment toward the top of the range, £5m-£10m of additional employee incentives and £10m-£15m of integration and restructuring costs.
The £100m buyback and progressive dividend provide shareholder support, while the balance sheet leaves capacity for further bolt-on M&A.
Longer term
The value-acceleration plan is moving from foundational investment to activation, with CRM, AI-enabled search, upgraded commerce platforms, product management and supply-chain automation intended to improve conversion and operating leverage.
RS Pro remains a meaningful growth lever: revenue grew 5% to 14.4% of Group revenue, with substantial expansion still available in APAC and especially America.
Solutions and services exceed 25% of Group revenue and grew 6% like-for-like; eProcurement grew 9%, supporting stickier customer relationships and share of wallet.
The medium-term mid-teens operating-margin ambition depends more on volume recovery and operating leverage than on services and integrated supply alone.
Competitive positioning in semiconductors is structurally narrower than the current cycle: RS is focused on MRO customers, while the strongest semiconductor demand is coming from data-centre and AI production supply chains.
Red flags
Analysts pressed management on losing share in semiconductors and passives despite a strong semiconductor cycle; management acknowledged that RS is oriented toward MRO rather than mainstream production customers, leaving a potentially persistent category disadvantage.
Management did not provide a quantified FY27 revenue, operating-profit or EPS outlook, relying instead on macro improvement, pricing and execution assumptions.
The claimed recovery remains modest: Q4 Group growth was still -0.3%, while Germany and Mexico remain challenging and the expected industrial recovery may benefit aerospace and defence more than RS's MRO exposure.
Gross-margin improvement in the Americas benefited from inventory management in H2 and management does not expect that benefit to repeat; FY27 gross margin is expected to be broadly flat.
Natural attrition is providing less cost flexibility as voluntary attrition declines, increasing the risk that restructuring or further investment weighs on operating leverage.
Forward outlook
Recommendation history
OpenFilings analyst view from primary-source filings and earnings calls — not investment advice.
Upcoming earnings
4:30 PM UTC+1
Period
Sep 2026
Est. EPS
—
Est. revenue
0
Earnings transcripts
Documents
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