TSX:MSI

Stock Analysis Report

Executive Summary

Morneau Shepell Inc. operates as a human resources consulting and technology company in Canada, the United States, and internationally.

Snowflake

Fundamentals

Reasonable growth potential with imperfect balance sheet.


Similar Companies

Share Price & News

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


Latest Share Price and Events


Market Performance


7 Day Return

-0.3%

MSI

-0.7%

CA Professional Services

-0.2%

CA Market


1 Year Return

14.1%

MSI

24.7%

CA Professional Services

1.1%

CA Market

Return vs Industry: MSI underperformed the Canadian Professional Services industry which returned 24.7% over the past year.

Return vs Market: MSI exceeded the Canadian Market which returned 1.1% over the past year.


Shareholder returns

MSIIndustryMarket
7 Day-0.3%-0.7%-0.2%
30 Day0.2%-2.5%-3.3%
90 Day5.5%-1.3%-1.6%
1 Year17.3%14.1%27.7%24.7%4.6%1.1%
3 Year71.9%55.8%57.3%44.6%13.1%3.1%
5 Year136.4%95.0%102.7%75.5%24.7%6.7%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

233.28x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: MSI (CA$31.82) is trading above our estimate of fair value (CA$8.16)

Significantly Below Fair Value: MSI is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: MSI is poor value based on its PE Ratio (233.3x) compared to the Professional Services industry average (18.7x).

PE vs Market: MSI is poor value based on its PE Ratio (233.3x) compared to the Canadian market (13.7x).


Price to Earnings Growth Ratio

PEG Ratio: MSI is poor value based on its PEG Ratio (3.8x)


Price to Book Ratio

PB vs Industry: MSI is overvalued based on its PB Ratio (3.5x) compared to the CA Professional Services industry average (2.2x).


Next Steps

Future Growth

How is Morneau Shepell forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

61.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MSI's forecast earnings growth (61.7% per year) is above the savings rate (1.9%).

Earnings vs Market: MSI's earnings (61.7% per year) are forecast to grow faster than the Canadian market (13.6% per year).

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

Revenue vs Market: MSI's revenue (11.4% per year) is forecast to grow faster than the Canadian market (5.7% per year).

High Growth Revenue: MSI's revenue (11.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if MSI's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Morneau Shepell performed over the past 5 years?

7.3%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Earnings Trend: MSI's earnings have grown by 7.3% per year over the past 5 years.

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

Earnings vs Industry: MSI had negative earnings growth (-78.1%) over the past year, making it difficult to compare to the Professional Services industry average (-31.4%).


Return on Equity

High ROE: MSI's Return on Equity (1.5%) is considered low.


Return on Assets

ROA vs Industry: MSI's Return on Assets is below or equal to the Professional Services industry average last year.


Return on Capital Employed

ROCE Improving: MSI's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Morneau Shepell's financial position?


Financial Position Analysis

Short Term Liabilities: MSI's short term assets (CA$228.2M) exceeds its short term liabilities (CA$126.1M)

Long Term Liabilities: MSI's short term assets (228.2M) do not cover its long term liabilities (691.1M)


Debt to Equity History and Analysis

Debt Level: MSI's debt to equity ratio (87.2%) is considered high

Reducing Debt: MSI's debt to equity ratio has reduced from 95.9% to 87.2% over the past 5 years.

Debt Coverage: MSI's debt is not well covered by operating cash flow (14%).

Interest Coverage: MSI's interest payments on its debt are not well covered by EBIT (2.5x coverage).


Balance Sheet

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

Debt Coverage by Assets: MSI's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

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

2.45%

Current Dividend Yield


Dividend Yield vs Market

company2.5%marketbottom25%2.0%markettop25%6.0%industryaverage1.7%forecastin3Years2.5%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: MSI's dividend (2.45%) is higher than the bottom 25% of dividend payers in the Canadian market (2.04%).

High Dividend: MSI's dividend (2.45%) is low compared to the top 25% of dividend payers in the Canadian market (6.03%).

Stable Dividend: MSI's dividends per share have been stable in the past 10 years.

Growing Dividend: MSI's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (571.8%), MSI's dividend payments are not well 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

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

2.1yrs

Average management tenure


CEO

Stephen Liptrap (53yo)

2.4yrs

Tenure

CA$2,217,688

Compensation

Mr. Stephen Liptrap has been Chief Executive Officer and President of Morneau Shepell Ltd since May 4, 2017. Mr. Liptrap's responsibilities include the development and execution of Morneau Shepell ’s overa ...


CEO Compensation Analysis

Compensation vs. Market: Stephen has recently become CEO, making it difficult to compare their total compensation against companies of similar size in the Canadian market.

Compensation vs Earnings: Stephen's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

2.1yrs

Average Tenure

58yo

Average Age

Experienced Management: MSI's management team is considered experienced (2.1 years average tenure).


Board Age and Tenure

3.6yrs

Average Tenure

62yo

Average Age

Experienced Board: MSI's board of directors are considered experienced (3.6 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellCA$92,71323 Aug 19
Neil King
EntityIndividual
Role
Senior Key Executive
Executive VP & Chief Commercial Officer of U.S.
Shares2,844
Max PriceCA$32.64
BuyCA$130,48022 Aug 19
Luc Bachand
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares4,000
Max PriceCA$32.62
BuyCA$78,28204 Dec 18
Luc Bachand
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares3,000
Max PriceCA$26.09

Ownership Breakdown


Management Team

  • Helen Reeves

    Senior Vice-President of Marketing & Communications

    • Tenure: 0yrs
  • Scott Milligan (58yo)

    Chief Corporate Officer & Executive VP

    • Tenure: 0yrs
    • Compensation: CA$909.00k
  • Rita Fridella

    Executive VP & President of LifeWorks

    • Tenure: 0yrs
    • Compensation: CA$898.50k
  • Pierre Chamberland (58yo)

    Executive VP

    • Tenure: 13.1yrs
    • Compensation: CA$1.01m
  • Stephen Liptrap (53yo)

    President

    • Tenure: 2.4yrs
    • Compensation: CA$2.22m
  • Neil King

    Executive VP & Chief Commercial Officer of U.S.

    • Tenure: 1.8yrs
    • Compensation: CA$784.92k
  • Bill Howatt

    Chief Research & Development Officer

    • Tenure: 4.3yrs
  • Susan Marsh

    General Counsel & Corporate Secretary

    • Tenure: 0yrs
  • Gillian Whitebread

    Executive VP & Chief Human Resources Officer

    • Tenure: 0.9yrs
  • Kaytek Przybylski

    Chief Data & Technology Officer and Executive VP

    • Tenure: 0.8yrs

Board Members

  • Ron Lalonde (63yo)

    Independent Director

    • Tenure: 3.6yrs
    • Compensation: CA$120.00k
  • Jack Mintz (67yo)

    Independent Director

    • Tenure: 9.8yrs
    • Compensation: CA$135.00k
  • Dale Ponder (62yo)

    Independent Director

    • Tenure: 3.7yrs
    • Compensation: CA$120.00k
  • Kish Kapoor (62yo)

    Director

    • Tenure: 1.2yrs
    • Compensation: CA$23.17k
  • Kevin Pennington (63yo)

    Independent Director

    • Tenure: 4.6yrs
    • Compensation: CA$182.38k
  • Luc Bachand (62yo)

    Independent Director

    • Tenure: 2.6yrs
    • Compensation: CA$126.00k
  • Jill Denham (58yo)

    Independent Chairman of the Board

    • Tenure: 4yrs
    • Compensation: CA$250.00k
  • Michele Trogni (54yo)

    Independent Director

    • Tenure: 2.2yrs
    • Compensation: CA$162.57k
  • Stephen Liptrap (53yo)

    President

    • Tenure: 2.4yrs
    • Compensation: CA$2.22m

Company Information

Morneau Shepell Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Morneau Shepell Inc.
  • Ticker: MSI
  • Exchange: TSX
  • Founded: 1962
  • Industry: Human Resource and Employment Services
  • Sector: Commercial Services
  • Market Cap: CA$2.055b
  • Shares outstanding: 64.58m
  • Website: https://www.morneaushepell.com

Number of Employees


Location

  • Morneau Shepell Inc.
  • One Morneau Shepell Centre
  • Suite 700
  • Toronto
  • Ontario
  • M3C 1W3
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MSITSX (The Toronto Stock Exchange)YesCommon SharesCACADSep 2005
MSIX.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDSep 2005
6M8DB (Deutsche Boerse AG)YesCommon SharesDEEURSep 2005

Biography

Morneau Shepell Inc. operates as a human resources consulting and technology company in Canada, the United States, and internationally. The company provides health and productivity, administrative, and ret ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/21 00:17
End of Day Share Price2019/10/18 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.