Mayfield Childcare (ASX:MFD) - Share price, News & Analysis

Q: What is the Fair Price of MFD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MFD (A$1.24) is trading below our estimate of [[fair value]] (A$2.17)

MFD fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	5/6
Past Performance	1/6
Financial Health	4/6
Dividends	3/6

MFD Stock Overview

Mayfield Childcare Limited provides long day childcare (LDC) services in Victoria, Australia.

Rewards

Trading at 42.8% below our estimate of its fair value

Earnings are forecast to grow 60.04% per year

Risk Analysis

Shareholders have been substantially diluted in the past year

Unstable dividend track record

Large one-off items impacting financial results

Profit margins (6.4%) are lower than last year (10%)

+ 1 more risk

Mayfield Childcare Competitors

Slater and Gordon

ASX:SGH

AU$72.9m

SILK Laser Australia

ASX:SLA

AU$96.5m

Shine Justice

ASX:SHJ

AU$169.0m

iSelect

ASX:ISU

AU$38.4m

Price History & Performance

Summary of all time highs, changes and price drops for Mayfield Childcare
Historical stock prices
Current Share Price	AU$1.24
52 Week High	AU$1.49
52 Week Low	AU$1.04
Beta	1.09
1 Month Change	-15.93%
3 Month Change	-8.15%
1 Year Change	16.43%
3 Year Change	34.78%
5 Year Change	3.33%
Change since IPO	7.83%

Recent News & Updates

May 24

Should You Investigate Mayfield Childcare Limited (ASX:MFD) At AU$1.46?

Mayfield Childcare Limited ( ASX:MFD ), might not be a large cap stock, but it received a lot of attention from a...

Mar 29

Is Mayfield Childcare (ASX:MFD) Using Too Much Debt?

Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...

Shareholder Returns

	MFD	AU Consumer Services	AU Market
7D	0.4%	5.3%	2.8%
1Y	16.4%	-8.6%	-9.6%

Return vs Industry: MFD exceeded the Australian Consumer Services industry which returned -8.6% over the past year.

Return vs Market: MFD exceeded the Australian Market which returned -9.6% over the past year.

Price Volatility

Is MFD's price volatile compared to industry and market?
MFD volatility
MFD Average Weekly Movement	5.9%
Consumer Services Industry Average Movement	7.1%
Market Average Movement	9.8%
10% most volatile stocks in AU Market	16.5%
10% least volatile stocks in AU Market	4.3%

Stable Share Price: MFD is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: MFD's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2015	n/a	Dean Clarke	https://www.mayfieldchildcare.com.au

Mayfield Childcare Limited provides long day childcare (LDC) services in Victoria, Australia. The company operates 36 LDC centers in Victoria, Queensland, and South Australia. Mayfield Childcare Limited was incorporated in 2015 and is based in Malvern East, Australia.

Mayfield Childcare Fundamentals Summary

How do Mayfield Childcare's earnings and revenue compare to its market cap?
MFD fundamental statistics
Market Cap	AU$80.23m
Earnings (TTM)	AU$2.57m
Revenue (TTM)	AU$40.06m

31.0x

P/E Ratio

2.0x

P/S Ratio

Is MFD overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MFD income statement (TTM)
Revenue	AU$40.06m
Cost of Revenue	AU$0
Gross Profit	AU$40.06m
Other Expenses	AU$37.49m
Earnings	AU$2.57m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	0.04
Gross Margin	100.00%
Net Profit Margin	6.42%
Debt/Equity Ratio	12.9%

How did MFD perform over the long term?

See historical performance and comparison

Dividends

3.2%

Current Dividend Yield

59%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is MFD undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

4/6

Valuation Score 4/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MFD?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MFD. This is calculated by dividing MFD's market cap by their current preferred multiple.
What is MFD's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$80.23m

MFD key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	5.5x
Enterprise Value/EBITDA	30.2x
PEG Ratio	0.5x

Price to Earnings Ratio vs Peers

How does MFD's PE Ratio compare to its peers?

MFD PE Ratio vs Peers

The above table shows the PE ratio for MFD vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	16.5x
SGH Slater and Gordon	19.7x	n/a	AU$72.9m
SLA SILK Laser Australia	21.7x	44.0%	AU$96.5m
SHJ Shine Justice	6.1x	9.5%	AU$169.0m
ISU iSelect	18.3x	n/a	AU$38.4m
MFD Mayfield Childcare	31x	60.0%	AU$80.2m

Forward PE

Price-To-Earnings vs Peers: MFD is expensive based on its Price-To-Earnings Ratio (31x) compared to the peer average (16.5x).

Price to Earnings Ratio vs Industry

How does MFD's PE Ratio compare vs other companies in the Global Consumer Services Industry?

Price-To-Earnings vs Industry: MFD is expensive based on its Price-To-Earnings Ratio (31x) compared to the Global Consumer Services industry average (17.9x)

Price to Earnings Ratio vs Fair Ratio

What is MFD's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MFD PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	31x
Fair PE Ratio	33.1x

Price-To-Earnings vs Fair Ratio: MFD is good value based on its Price-To-Earnings Ratio (31x) compared to the estimated Fair Price-To-Earnings Ratio (33.1x).

Share Price vs Fair Value

What is the Fair Price of MFD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MFD (A$1.24) is trading below our estimate of fair value (A$2.17)

Significantly Below Fair Value: MFD is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: MFD is good value based on its PEG Ratio (0.5x)

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Future Growth

How is Mayfield Childcare forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

Future Growth Score

5/6

Future Growth Score 5/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

60.0%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MFD's forecast earnings growth (60% per year) is above the savings rate (1.8%).

Earnings vs Market: MFD's earnings (60% per year) are forecast to grow faster than the Australian market (6% per year).

High Growth Earnings: MFD's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: MFD's revenue (38.6% per year) is forecast to grow faster than the Australian market (5.2% per year).

High Growth Revenue: MFD's revenue (38.6% per year) is forecast to grow faster than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: MFD's Return on Equity is forecast to be low in 3 years time (14.3%).

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Past Performance

How has Mayfield Childcare performed over the past 5 years?

Past Performance Score

1/6

Past Performance Score 1/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

11.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MFD has a large one-off loss of A$1.3M impacting its December 31 2021 financial results.

Growing Profit Margin: MFD's current net profit margins (6.4%) are lower than last year (10%).

Past Earnings Growth Analysis

Earnings Trend: MFD has become profitable over the past 5 years, growing earnings by 11.9% per year.

Accelerating Growth: MFD's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: MFD had negative earnings growth (-31.2%) over the past year, making it difficult to compare to the Consumer Services industry average (1.1%).

Return on Equity

High ROE: MFD's Return on Equity (3.9%) is considered low.

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Financial Health

How is Mayfield Childcare's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MFD's short term assets (A$5.1M) do not cover its short term liabilities (A$14.5M).

Long Term Liabilities: MFD's short term assets (A$5.1M) do not cover its long term liabilities (A$146.5M).

Debt to Equity History and Analysis

Debt Level: MFD's net debt to equity ratio (9.5%) is considered satisfactory.

Reducing Debt: MFD's debt to equity ratio has reduced from 35.8% to 12.9% over the past 5 years.

Debt Coverage: MFD's debt is well covered by operating cash flow (115.6%).

Interest Coverage: MFD's interest payments on its debt are well covered by EBIT (4.9x coverage).

Balance Sheet

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Dividend

What is Mayfield Childcare current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

3.23%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MFD's dividend (3.23%) is higher than the bottom 25% of dividend payers in the Australian market (2.73%).

High Dividend: MFD's dividend (3.23%) is low compared to the top 25% of dividend payers in the Australian market (6.67%).

Stability and Growth of Payments

Stable Dividend: MFD has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: MFD has only been paying a dividend for 4 years, and since then payments have fallen.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (59.3%), MFD's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (29.2%), MFD's dividend payments are well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

5.6yrs

Average management tenure

CEO

Dean Clarke

5.58yrs

Tenure

AU$214,335

Compensation

Mr. Dean Clarke serves as Chief Executive Officer of Mayfield Childcare Limited since November 28, 2016 and has been its Director since March 16, 2016. Since 2005, Mr. Clarke has overseen the identificatio...

CEO Compensation Analysis

Compensation vs Market: Dean's total compensation ($USD148.87K) is below average for companies of similar size in the Australian market ($USD289.00K).

Compensation vs Earnings: Dean's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: MFD's management team is seasoned and experienced (5.6 years average tenure).

Board Members

Experienced Board: MFD's board of directors are considered experienced (5.6 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 99%.

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2021/12/31
Annual Earnings	2021/12/31