| Valuation method | Value, £ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 87.23 | -38 |
| Intrinsic value (DCF) | 58.70 | -58 |
| Graham-Dodd Method | 0.32 | -100 |
| Graham Formula | 1.55 | -99 |
Johnson Service Group PLC (JSG.L) is a leading UK-based provider of textile rental and related services, operating in the Specialty Business Services sector under Industrials. The company serves businesses across two key segments: Workwear and Hotel, Restaurants & Catering (HoReCa). Its Workwear division supplies garments, protective wear, and hygiene services under the Johnsons Workwear brand, while the HoReCa segment delivers linen services (tablecloths, napkins, chefs' attire) through brands like Afonwen, Bourne, and London Linen. Founded in 1953 and headquartered in Preston Brook, Johnson Service Group leverages a national infrastructure to offer laundering and rental solutions, emphasizing sustainability and operational efficiency. With a market cap of £593M (as of latest data), the company plays a critical role in supporting UK hospitality and industrial sectors, where outsourcing textile maintenance is a growing trend. Its asset-light model and recurring revenue streams position it as a resilient player in business services.
Johnson Service Group presents a mixed investment profile. Strengths include its market leadership in UK textile rental, diversified client base across workwear and hospitality, and strong cash flow generation (£141.8M operating cash flow in the latest period). The company’s high beta (1.54) suggests sensitivity to economic cycles, particularly in hospitality demand. While net income (£35.6M) and dividends (4p/share) are stable, elevated debt (£127.1M) and modest cash reserves (£11.5M) could limit flexibility amid rising interest rates. Capital expenditures (£44.5M) indicate ongoing investment in service capacity. The stock may appeal to investors seeking exposure to UK industrial services with a dividend yield, but macroeconomic risks in its key end markets warrant caution.
Johnson Service Group’s competitive advantage stems from its dual-segment focus, national scale, and established brand portfolio in the UK textile rental market. In Workwear, it differentiates through integrated hygiene services and protective wear solutions, catering to regulated industries like healthcare and manufacturing. The HoReCa segment benefits from long-term contracts with hotels and restaurants, where reliability and linen quality are critical. However, the company faces pricing pressure from smaller regional laundries and competition from lower-cost alternatives like disposable textiles. Its asset-heavy model (with owned laundering facilities) provides control over service quality but requires sustained capex. Sustainability initiatives, such as water-efficient processes, are becoming a key battleground with rivals. While JSG’s £513M revenue reflects strong market penetration, its growth depends on expanding service offerings (e.g., fire retardant workwear) and cross-selling to existing clients. The lack of international exposure limits upside compared to global peers.