ASX:MEA

Stock Analysis Report

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Executive Summary

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


Snowflake Analysis

Flawless balance sheet and good value.


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 is not significantly more volatile than the rest of Australian stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: MEA's weekly volatility (9%) has been stable over the past year.


Market Performance


7 Day Return

-5.4%

MEA

10.0%

AU Real Estate

-0.3%

AU Market


1 Year Return

108.5%

MEA

-13.5%

AU Real Estate

11.2%

AU Market

Return vs Industry: MEA exceeded the Australian Real Estate industry which returned -13.5% over the past year.

Return vs Market: MEA exceeded the Australian Market which returned 11.2% over the past year.


Shareholder returns

MEAIndustryMarket
7 Day-5.4%10.0%-0.3%
30 Day23.0%9.8%2.7%
90 Day38.2%-0.8%4.4%
1 Year110.1%108.5%-11.9%-13.5%14.7%11.2%
3 Year44.2%43.0%-5.0%-12.6%30.8%15.1%
5 Year-51.3%-54.4%27.6%8.2%62.3%30.7%

Long-Term 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?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MEA (A$0.62) is trading below our estimate of fair value (A$17.18)

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


Price To Earnings Ratio

PE vs Industry: MEA is good value based on its PE Ratio (10.5x) compared to the AU Real Estate industry average (28.1x).

PE vs Market: MEA is good value based on its PE Ratio (10.5x) compared to the Australian market (19.8x).


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 (2.7x) compared to the AU Real Estate industry average (1.1x).


Next Steps

Future Growth

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

20.6%

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?

-15.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MEA has a large one-off gain of A$4.3M impacting its December 31 2020 financial results.

Growing Profit Margin: MEA became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: MEA has become profitable over the past 5 years, growing earnings by -15.1% per year.

Accelerating Growth: MEA has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: MEA has become profitable in the last year, making it difficult to compare its past year earnings growth to the Real Estate industry (-13.3%).


Return on Equity

High ROE: MEA's Return on Equity (25.8%) is considered high.


Next Steps

Financial Health

How is McGrath's financial position?


Financial Position Analysis

Short Term Liabilities: MEA's short term assets (A$44.1M) exceed its short term liabilities (A$26.5M).

Long Term Liabilities: MEA's short term assets (A$44.1M) exceed its long term liabilities (A$21.1M).


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 12.8%.

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

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


Balance Sheet


Next Steps

Dividend

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

16.26%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: MEA's dividend (16.26%) is higher than the bottom 25% of dividend payers in the Australian market (2.08%).

High Dividend: MEA's dividend (16.26%) is in the top 25% of dividend payers in the Australian market (5.35%)


Stability and Growth of Payments

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

Growing Dividend: MEA's dividend payments have increased, but the company has only paid a dividend for 5 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (8.5%), MEA's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

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

2.6yrs

Average management tenure


CEO

Eddie Law

0.58

Tenure

Mr. Edward Law, also known Eddie, serves as Chief Executive officer of McGrath Limited since August 24, 2020.


Leadership Team

NamePositionTenureCompensationOwnership
John McGrath
Founder & Executive Director21yrsAU$552.86k22.25%
A$ 23.8m
Howard Herman
Chief Financial Officer1.75yrsAU$470.27kno data
Christopher Mourd
Head of Franchise Network3.75yrsAU$525.82kno data
Rob Fearnley
Head of Company Owned Property Management3.5yrsAU$346.67k0.059%
A$ 62.5k
Edward Law
Chief Executive Officer0.58yrno datano data
Terri Sissian
Communications Directorno datano datano data
Scott Kennedy-Green
Chief Auctioneerno datano datano data
Philip Mackey
Company Secretary1.08yrsno datano data

2.6yrs

Average Tenure

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


Board Members

NamePositionTenureCompensationOwnership
John McGrath
Founder & Executive Director21yrsAU$552.86k22.25%
A$ 23.8m
Peter Lewis
Non-Executive Independent Chairman3.08yrsAU$130.67k0.082%
A$ 87.5k
Shane Smollen
Additional Non-Independent Non-Executive Director0.50yrno datano data
Andrew Robinson
Non-Executive Independent Director3.08yrsAU$93.33k0.032%
A$ 33.7k
Wayne Mo
Non-Executive Director2.75yrsno datano data

3.1yrs

Average Tenure

Experienced Board: MEA'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.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

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$106.784m
  • 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 Analysis2021/03/02 07:07
End of Day Share Price2021/03/02 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.