ASX:MEA

Stock Analysis Report

Executive Summary

McGrath Limited operates as an integrated residential real estate services company in Australia.

Risk Analysis

Earnings have declined by -67.17% per year over past 5 years

Currently unprofitable and not forecast to become profitable over the next 3 years

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year

+ 1 more risk


Snowflake Analysis

Flawless balance sheet with weak fundamentals.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: MEA's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-5.6%

MEA

-0.5%

AU Real Estate

0.5%

AU Market


1 Year Return

17.5%

MEA

46.2%

AU Real Estate

19.1%

AU Market

Return vs Industry: MEA underperformed the Australian Real Estate industry which returned 46.2% over the past year.

Return vs Market: MEA underperformed the Australian Market which returned 19.1% over the past year.


Shareholder returns

MEAIndustryMarket
7 Day-5.6%-0.5%0.5%
30 Day1.5%-1.8%-1.0%
90 Day52.3%7.9%0.2%
1 Year17.5%17.5%51.3%46.2%24.9%19.1%
3 Year-60.3%-61.5%31.5%17.6%37.0%18.2%
5 Yearn/a45.1%19.6%58.6%22.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

1.82x

Price to Book (PB) ratio


Share Price vs. Fair Value

Below Fair Value: Insufficient data to calculate MEA's fair value to establish if it is undervalued.

Significantly Below Fair Value: Insufficient data to calculate MEA's fair value to establish if it is undervalued.


Price To Earnings Ratio

PE vs Industry: MEA is unprofitable, so we can't compare its PE Ratio to the Real Estate industry average.

PE vs Market: MEA is unprofitable, so we can't compare its PE Ratio to the Australian market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate MEA's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: MEA is overvalued based on its PB Ratio (1.8x) compared to the AU Real Estate industry average (0.9x).


Next Steps

Future Growth

How is McGrath forecast to perform in the next 1 to 3 years based on estimates from 0 analysts?

22.0%

Forecasted Real Estate industry annual growth in earnings


In this section we usually present revenue and earnings growth projections based on the consensus estimates of professional analysts to help investors understand the company’s ability to generate profit. But as McGrath has not provided enough past data and has no analyst forecast, its future earnings cannot be reliably calculated by extrapolating past data or using analyst predictions.

This is quite a rare situation as 97% of companies covered by SimplyWall St do have past financial data.


Next Steps

Past Performance

How has McGrath performed over the past 5 years?

-67.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MEA is currently unprofitable.

Growing Profit Margin: MEA is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: MEA is unprofitable, and losses have increased over the past 5 years at a rate of -67.2% per year.

Accelerating Growth: Unable to compare MEA's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: MEA is unprofitable, making it difficult to compare its past year earnings growth to the Real Estate industry (-2.4%).


Return on Equity

High ROE: MEA has a negative Return on Equity (-50.48%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is McGrath's financial position?


Financial Position Analysis

Short Term Liabilities: MEA's short term assets (A$32.3M) exceed its short term liabilities (A$15.7M).

Long Term Liabilities: MEA's short term assets (A$32.3M) exceed its long term liabilities (A$3.0M).


Debt to Equity History and Analysis

Debt Level: MEA is debt free.

Reducing Debt: MEA has no debt compared to 5 years ago when its debt to equity ratio was 56.4%.


Balance Sheet

Inventory Level: MEA has a low level of unsold assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if MEA's debt is covered by short term assets.


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: MEA has sufficient cash runway for more than a year based on its current free cash flow.

Forecast Cash Runway: MEA has sufficient cash runway for 1.6 years if free cash flow continues to reduce at historical rates of -52.2% each year.


Next Steps

Dividend

What is McGrath's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

company0%marketbottom25%2.4%markettop25%5.6%industryaverage2.5%forecastin3Yearsn/a

Current dividend yield vs market & industry

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

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


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: MEA is not paying a notable dividend for the Australian market.


Future Payout to Shareholders

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


Next Steps

Management

What is the CEO of McGrath's salary, the management and board of directors tenure and is there insider trading?

2.0yrs

Average management tenure


CEO

Geoff Lucas (53yo)

1.8yrs

Tenure

AU$588,639

Compensation

Mr. Geoffrey Lucas, also known as Geoff, B.Com, CPA, FAICD, has been Chief Executive Officer of McGrath Ltd since February 27, 2018. Mr. Lucas rejoined McGrath Limited in February 2018. He served as Chief  ...


CEO Compensation Analysis

Compensation vs Market: Geoff's total compensation ($USD404.12K) is above average for companies of similar size in the Australian market ($USD261.19K).

Compensation vs Earnings: Geoff's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

2.0yrs

Average Tenure

55yo

Average Age

Experienced Management: MEA's management team is considered experienced (2 years average tenure).


Board Age and Tenure

1.8yrs

Average Tenure

Experienced Board: MEA's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: MEA insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$1,292,99928 Oct 19
Yunhui Lin
EntityIndividual
Shares5,927,796
Max PriceAU$0.36
SellAU$113,71706 Aug 19
Perpetual Limited
EntityCompany
Shares568,583
Max PriceAU$0.20
SellAU$167,39905 Aug 19
Perpetual Limited
EntityCompany
Shares777,348
Max PriceAU$0.24
SellAU$453,31412 Jul 19
Perpetual Limited
EntityCompany
Shares1,748,287
Max PriceAU$0.26
SellAU$656,42731 May 19
Perpetual Limited
EntityCompany
Shares2,546,058
Max PriceAU$0.28

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 17.3%.


Management Team

  • Geoff Lucas (53yo)

    Chief Executive Officer

    • Tenure: 1.8yrs
    • Compensation: AU$588.64k
  • John McGrath (55yo)

    Founder & Executive Director

    • Tenure: 19.8yrs
    • Compensation: AU$552.89k
  • Howard Herman (68yo)

    Chief Financial Officer

    • Tenure: 0.5yrs
    • Compensation: AU$347.69k
  • Chris Mourd

    Head of Franchise Network

    • Tenure: 2.5yrs
    • Compensation: AU$441.79k
  • Scott Kennedy-Green

    Chief Auctioneer

    • Tenure: 0yrs
  • Terri Sissian

    Communications Director

    • Tenure: 0yrs
  • Melissa Jones

    Company Secretary

    • Tenure: 1.8yrs
  • Rob Fearnley

    Head of Company Owned Property Management

    • Tenure: 2.3yrs
    • Compensation: AU$276.26k

Board Members

  • John McGrath (55yo)

    Founder & Executive Director

    • Tenure: 19.8yrs
    • Compensation: AU$552.89k
  • Peter Lewis (55yo)

    Non-Executive Independent Chairman

    • Tenure: 1.8yrs
    • Compensation: AU$140.00k
  • Andrew Robinson

    Non-Executive Independent Director

    • Tenure: 1.8yrs
    • Compensation: AU$100.00k
  • Wayne Mo

    Non-Executive Director

    • Tenure: 1.5yrs

Company Information

McGrath Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: McGrath Limited
  • Ticker: MEA
  • Exchange: ASX
  • Founded: 1988
  • Industry: Real Estate Services
  • Sector: Real Estate
  • Market Cap: AU$55.895m
  • Shares outstanding: 166.85m
  • Website: https://www.mcgrath.com.au

Number of Employees


Location

  • McGrath Limited
  • 55 Pyrmont Street
  • Pyrmont
  • New South Wales
  • 2009
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MEACHIA (Chi-X Australia)YesOrdinary SharesAUAUDDec 2015
MEAASX (Australian Securities Exchange)YesOrdinary SharesAUAUDDec 2015

Biography

McGrath Limited operates as an integrated residential real estate services company in Australia. It operates through Company Owned Sales, Company Owned Property Management, Franchise Services, and Other se ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/15 10:42
End of Day Share Price2019/12/13 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


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.