Capita PLC

 

The decline of more than 80% in Capita’s share price over the last three years tells a familiar story of outsourcing companies on the back foot: operationally, financially, and above all reputationally. However does this settled narrative mask the green shoots of recovery?

In this special report, Tussell has drilled into Capita's UK public sector contracts, that are still a major contributor to its overall turnover. Below is a glimpse into what we discovered - sign up at the bottom of the page to receive the full report.

 

Strong market position

Since January 2015, Capita has won 693 contracts across the wider public sector. That’s an average of 16 contracts per month - equivalent to one contract every two days. No other outsourcer comes close to being this embedded across all parts of the wider public sector.

 

Fewer contracts, better quality

Year on year declines in the number of new public contracts being won have been offset by a doubling in the average contract value. This seems to validate "new" Capita’s more disciplined approach to bidding. 

Secure order book

Maturing contracts do not pose a major risk in the short term. Of Capita contracts with a published end date, more than two thirds is secured through to 2022 or beyond. 

Our special report sheds light on other indicators of improving revenue quality: lengthening contracts; an attractive sector mix; and reassuring customer diversification. 

Conclusion

What emerges from our fundamental analysis of Capita is a business on the road to recovery: a strong market position combined with lower risk, more predictability and better management. 

In the wake of Carillion, the outsourcing sector is not out of the woods yet. Over the last few years too many contracts were awarded to suppliers that did not understand the risks. As a result, financial stress still threatens several large outsourcers. But in our opinion, Capita's worst days are behind it.

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