ASX:A2M

Stock Analysis Report

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Executive Summary

The a2 Milk Company Limited, together with its subsidiaries, sells A2 protein type branded milk and related products in Australia, New Zealand, China, other Asian countries, and the United States. More Details

Rewards

Trading at 68.5% below our estimate of its fair value

Earnings are forecast to grow 19.11% per year

Risk Analysis

No risks detected for A2M from our risk checks.


Snowflake Analysis

Flawless balance sheet with reasonable growth potential.


Similar Companies

Share Price & News

How has a2 Milk's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: A2M is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 10% a week.

Volatility Over Time: A2M's weekly volatility (10%) has been stable over the past year.


Market Performance


7 Day Return

6.8%

A2M

-0.3%

AU Food

0.3%

AU Market


1 Year Return

-43.8%

A2M

15.2%

AU Food

12.5%

AU Market

Return vs Industry: A2M underperformed the Australian Food industry which returned 15.2% over the past year.

Return vs Market: A2M underperformed the Australian Market which returned 12.5% over the past year.


Shareholder returns

A2MIndustryMarket
7 Day6.8%-0.3%0.3%
30 Day-10.4%2.1%2.2%
90 Day-30.6%2.5%4.0%
1 Year-43.8%-43.8%18.4%15.2%16.1%12.5%
3 Year-23.6%-23.6%-2.1%-10.7%31.1%15.1%
5 Year472.5%472.5%24.7%10.1%62.5%31.3%

Long-Term Price Volatility Vs. Market

How volatile is a2 Milk's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is a2 Milk undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: A2M (A$9.36) is trading below our estimate of fair value (A$29.76)

Significantly Below Fair Value: A2M is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: A2M is poor value based on its PE Ratio (23.3x) compared to the AU Food industry average (21.4x).

PE vs Market: A2M is poor value based on its PE Ratio (23.3x) compared to the Australian market (20x).


Price to Earnings Growth Ratio

PEG Ratio: A2M is poor value based on its PEG Ratio (1.2x)


Price to Book Ratio

PB vs Industry: A2M is overvalued based on its PB Ratio (6.3x) compared to the AU Food industry average (1.5x).


Next Steps

Future Growth

How is a2 Milk forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

19.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: A2M's forecast earnings growth (19.1% per year) is above the savings rate (2%).

Earnings vs Market: A2M's earnings (19.1% per year) are forecast to grow faster than the Australian market (15.6% per year).

High Growth Earnings: A2M's earnings are forecast to grow, but not significantly.

Revenue vs Market: A2M's revenue (16.2% per year) is forecast to grow faster than the Australian market (5.6% per year).

High Growth Revenue: A2M's revenue (16.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: A2M's Return on Equity is forecast to be high in 3 years time (21.7%)


Next Steps

Past Performance

How has a2 Milk performed over the past 5 years?

41.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: A2M has high quality earnings.

Growing Profit Margin: A2M's current net profit margins (20%) are lower than last year (21.9%).


Past Earnings Growth Analysis

Earnings Trend: A2M's earnings have grown significantly by 41.6% per year over the past 5 years.

Accelerating Growth: A2M's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: A2M had negative earnings growth (-2.5%) over the past year, making it difficult to compare to the Food industry average (-19.6%).


Return on Equity

High ROE: A2M's Return on Equity (27%) is considered high.


Next Steps

Financial Health

How is a2 Milk's financial position?


Financial Position Analysis

Short Term Liabilities: A2M's short term assets (NZ$1.1B) exceed its short term liabilities (NZ$198.6M).

Long Term Liabilities: A2M's short term assets (NZ$1.1B) exceed its long term liabilities (NZ$14.4M).


Debt to Equity History and Analysis

Debt Level: A2M is debt free.

Reducing Debt: A2M has not had any debt for past 5 years.

Debt Coverage: A2M has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: A2M has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet


Next Steps

Dividend

What is a2 Milk current dividend yield, its reliability and sustainability?

0.60%

Forecast Dividend Yield


Dividend Yield vs Market

Notable Dividend: Unable to evaluate A2M's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate A2M's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if A2M's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if A2M's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of A2M's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

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

2.6yrs

Average management tenure


CEO

David Bortolussi (51 yo)

0.083

Tenure

Mr. David L. Bortolussi, BComm, FFin, FCA, served as Group President of Innerwear International at Hanesbrands Inc. since April 2019 until February 6, 2021. He serves as Managing Director and Chief Executi...


Leadership Team

NamePositionTenureCompensationOwnership
David Bortolussi
MD, CEO & Director0.083yrno datano data
Race Strauss
Chief Financial Officer1.17yrsno data0.0010%
NZ$ 71.3k
Shareef Khan
Chief Operating Officerno datano data0.054%
NZ$ 3.8m
David Akers
Head of Investor Relationsno datano datano data
Jaron McVicar
General Counsel & Company Secretary4.33yrsno data0.0020%
NZ$ 141.2k
Andrew Clarke
Chief Scientific Advisor to the CEO2.58yrsno datano data
Susan Massasso
Chief Growth & Brand Officer1.08yrsno datano data
Peter Nathan
Chief Executive Officer of Asia Pacific3.75yrsno data0.16%
NZ$ 11.5m
Blake Waltrip
Chief Executive of USA Region4.83yrsno data0.0091%
NZ$ 632.5k
Jane Xu
Executive Vice President of Greater China3.58yrsno datano data
Li Xiao
Chief Executive of Greater China1.92yrsno datano data

2.6yrs

Average Tenure

Experienced Management: A2M's management team is considered experienced (2.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
David Bortolussi
MD, CEO & Director0.083yrno datano data
Warwick Every-Burns
Independent Non-Executive Director4.58yrsNZ$216.50k0.013%
NZ$ 940.0k
David Lovat Hearn
Non-Executive Chairman of the Board6yrsNZ$182.95k0.14%
NZ$ 9.9m
Chien Ling Lee
Independent Non-Executive Director0.083yrno datano data
Julia Hoare
Independent Deputy Chairman & Lead Non Executive Director6yrsNZ$256.00k0.0067%
NZ$ 470.3k
Philippa Greenwood
Independent Non-Executive Director1.67yrsNZ$203.50kno data

3.1yrs

Average Tenure

59.5yo

Average Age

Experienced Board: A2M's board of directors are considered experienced (3.1 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 not been meaningfully diluted in the past year.


Top Shareholders

Company Information

The a2 Milk Company Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: The a2 Milk Company Limited
  • Ticker: A2M
  • Exchange: ASX
  • Founded: 2000
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Market Cap: NZ$7.508b
  • Listing Market Cap: NZ$6.989b
  • Shares outstanding: 743.41m
  • Website: https://www.thea2milkcompany.com

Number of Employees


Location

  • The a2 Milk Company Limited
  • 51 Shortland Street
  • Level 10
  • Auckland
  • 1010
  • New Zealand

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
ATMNZSE (New Zealand Stock Exchange)YesOrdinary SharesNZNZDApr 2004
ACOP.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDApr 2004
14LDB (Deutsche Boerse AG)YesOrdinary SharesDEEURApr 2004
A2MASX (Australian Securities Exchange)YesOrdinary SharesAUAUDApr 2004
A2MCHIA (Chi-X Australia)YesOrdinary SharesAUAUDApr 2004
ACOP.YOTCPK (Pink Sheets LLC)UNSPONSRED ADSUSUSDMay 2019

Biography

The a2 Milk Company Limited, together with its subsidiaries, sells A2 protein type branded milk and related products in Australia, New Zealand, China, other Asian countries, and the United States. The comp...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/03/04 07:08
End of Day Share Price2021/03/04 00:00
Earnings2020/12/31
Annual Earnings2020/06/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.