TSX:MRD

Stock Analysis Report

Melcor Developments

Executive Summary

Melcor Developments Ltd. operates as a real estate development company in the United States and Canada.

Rewards

PE ratio (7.4x) is below the Canadian market (15.8x)

Revenue is forecast to grow 7.62% per year

Risk Analysis

Earnings have declined by -15.77% per year over past 5 years

Debt is not well covered by operating cash flow

Unstable dividend track record



Snowflake Analysis

Adequate balance sheet average dividend payer.

Share Price & News

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


Latest Share Price and Events

Stable Share Price: MRD has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.2%

MRD

0.9%

CA Real Estate

1.5%

CA Market


1 Year Return

-0.2%

MRD

25.2%

CA Real Estate

9.8%

CA Market

Return vs Industry: MRD underperformed the Canadian Real Estate industry which returned 25.6% over the past year.

Return vs Market: MRD underperformed the Canadian Market which returned 10.4% over the past year.


Shareholder returns

MRDIndustryMarket
7 Day0.2%0.9%1.5%
30 Day3.2%2.8%2.4%
90 Day5.8%3.2%6.2%
1 Year3.8%-0.2%27.3%25.2%13.4%9.8%
3 Year-0.6%-10.9%58.4%48.9%17.7%7.0%
5 Year-7.0%-22.5%91.0%51.8%36.5%16.4%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

7.6x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: MRD (CA$12.67) is trading above our estimate of fair value (CA$6.79)

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


Price To Earnings Ratio

PE vs Industry: MRD is good value based on its PE Ratio (7.4x) compared to the Real Estate industry average (12.8x).

PE vs Market: MRD is good value based on its PE Ratio (7.4x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: MRD is good value based on its PB Ratio (0.4x) compared to the CA Real Estate industry average (0.9x).


Next Steps

Future Growth

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

7.6%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if MRD's forecast earnings growth is above the savings rate (1.4%).

Earnings vs Market: Insufficient data to determine if MRD's earnings are forecast to grow faster than the Canadian market

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

Revenue vs Market: MRD's revenue (7.6% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: MRD's revenue (7.6% 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 MRD's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Melcor Developments performed over the past 5 years?

-15.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MRD has high quality earnings.

Growing Profit Margin: MRD's current net profit margins (22.9%) are lower than last year (23.3%).


Past Earnings Growth Analysis

Earnings Trend: MRD's earnings have declined by -15.8% per year over the past 5 years.

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

Earnings vs Industry: MRD had negative earnings growth (-4.2%) over the past year, making it difficult to compare to the Real Estate industry average (-22.9%).


Return on Equity

High ROE: MRD's Return on Equity (4.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Melcor Developments's financial position?


Financial Position Analysis

Short Term Liabilities: MRD's short term assets (CA$902.8M) exceed its short term liabilities (CA$199.0M).

Long Term Liabilities: MRD's short term assets (CA$902.8M) exceed its long term liabilities (CA$673.4M).


Debt to Equity History and Analysis

Debt Level: MRD's debt to equity ratio (59.9%) is considered high.

Reducing Debt: MRD's debt to equity ratio has reduced from 68.6% to 59.9% over the past 5 years.

Debt Coverage: MRD's debt is not well covered by operating cash flow (7%).

Interest Coverage: MRD's interest payments on its debt are well covered by EBIT (4x coverage).


Balance Sheet

Inventory Level: MRD has a high level of physical assets or inventory.

Debt Coverage by Assets: MRD's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

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

3.69%

Current Dividend Yield


Dividend Yield vs Market

company3.7%marketbottom25%1.9%markettop25%5.4%industryaverage1.3%forecastin3Years3.8%

Current dividend yield vs market & industry

Notable Dividend: MRD's dividend (3.79%) is higher than the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: MRD's dividend (3.79%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


Stability and Growth of Payments

Stable Dividend: MRD's dividend payments have been volatile in the past 10 years.

Growing Dividend: MRD's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (29.8%), MRD's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MRD's dividends in 3 years are forecast to be well covered by earnings (35.4% payout ratio).


Next Steps

Management

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

3.4yrs

Average management tenure


CEO

Darin Rayburn 0

2.8yrs

Tenure

CA$1,006,397

Compensation

Mr. Darin Anthony Rayburn serves as President & CEO at Melcor Real Estate Investment Trust from October 1, 2019. He has been the Chief Executive Officer and President of Melcor Developments Ltd. since Apri ...


CEO Compensation Analysis

Compensation vs Market: Darin's total compensation ($USD771.36K) is about average for companies of similar size in the Canadian market ($USD1.00M).

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


Management Age and Tenure

3.4yrs

Average Tenure

Experienced Management: MRD's management team is considered experienced (3.4 years average tenure).


Board Age and Tenure

11.0yrs

Average Tenure

71yo

Average Age

Experienced Board: MRD's board of directors are seasoned and experienced ( 11 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyCA$20,93902 Jan 20
Darin Rayburn
EntityIndividual
Role
Chief Executive Officer
CEO & President
Shares1,650
Max PriceCA$12.69
SellCA$10,38621 Nov 19
Graeme Melton
EntityIndividual
Shares850
Max PriceCA$12.22
SellCA$10,15702 Oct 19
Graeme Melton
EntityIndividual
Shares823
Max PriceCA$12.34
BuyCA$11,72329 Aug 19
Canadian Imperial Bank of Commerce, Asset Management Arm
EntityCompany
Shares1,000
Max PriceCA$11.72
BuyCA$4,82416 Aug 19
Naomi Stefura
EntityIndividual
Role
Chief Financial Officer
CFO & Corporate Secretary
Shares400
Max PriceCA$12.06
BuyCA$12,31014 Aug 19
Darin Rayburn
EntityIndividual
Role
Chief Executive Officer
CEO & President
Shares1,000
Max PriceCA$12.31
BuyCA$26,90715 May 19
Gordon Clanachan
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceCA$13.59
SellCA$58,30028 Mar 19
Kamandor Holdings Ltd
EntityCompany
Shares4,400
Max PriceCA$13.25
SellCA$103,38825 Mar 19
Kamandor Holdings Ltd
EntityCompany
Shares7,800
Max PriceCA$13.27
SellCA$181,69220 Mar 19
Kamandor Holdings Ltd
EntityCompany
Shares13,600
Max PriceCA$13.36

Ownership Breakdown

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


Management Team

  • Brett Halford

    Vice-President of Recreational Properties

    • Compensation: CA$225.00k
  • Darin Rayburn

    CEO & President

    • Tenure: 2.8yrs
    • Compensation: CA$1.01m
  • Naomi Stefura

    CFO & Corporate Secretary

    • Tenure: 3.4yrs
    • Compensation: CA$534.54k
  • Nicole Forsythe

    Director of Corporate Communication

    • Guy Pelletier

      Vice-President of Red Deer Region

      • Tenure: 23yrs
      • Compensation: CA$320.14k
    • Jarett Thompson

      Vice-President of New Leasing & Sales

      • Ryan Mott

        Regional Manager of USA

        • Compensation: CA$364.28k

      Board Members

      • Cathy Roozen (63yo)

        Independent Director

        • Tenure: 13yrs
        • Compensation: CA$38.25k
      • Ross Grieve (71yo)

        Independent Director

        • Tenure: 17yrs
        • Compensation: CA$36.00k
      • Andy Melton

        Director

        • Tenure: 35yrs
        • Compensation: CA$657.34k
      • Tim Melton

        Chairman

        • Tenure: 2.8yrs
        • Compensation: CA$836.03k
      • Ralph Young (73yo)

        Independent Director

        • Tenure: 44yrs
        • Compensation: CA$36.00k
      • Eric Newell (74yo)

        Independent Director

        • Tenure: 5.8yrs
        • Compensation: CA$38.25k
      • Gordon Clanachan (64yo)

        Independent Director

        • Tenure: 11yrs
        • Compensation: CA$50.25k
      • Allan Scott

        Lead Director

        • Tenure: 5.8yrs
        • Compensation: CA$52.00k
      • Kathleen Melton

        Director

        • Tenure: 3.8yrs
        • Compensation: CA$31.50k

      Company Information

      Melcor Developments Ltd.'s company bio, employee growth, exchange listings and data sources


      Key Information

      • Name: Melcor Developments Ltd.
      • Ticker: MRD
      • Exchange: TSX
      • Founded: 1923
      • Industry: Real Estate Development
      • Sector: Real Estate
      • Market Cap: CA$432.336m
      • Shares outstanding: 33.23m
      • Website: https://www.melcor.ca

      Number of Employees


      Location

      • Melcor Developments Ltd.
      • 10310 Jasper Avenue NW
      • Suite 900
      • Edmonton
      • Alberta
      • T5J 1Y8
      • Canada

      Listings

      TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
      MRDTSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 1975
      MODV.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJan 1975

      Biography

      Melcor Developments Ltd. operates as a real estate development company in the United States and Canada. The company operates through Community Development, Property Development, Investment Property, REIT, and Recreational Property divisions. It develops, manages, and owns mixed-use residential communities, business and industrial parks, office buildings, retail commercial centers, and golf courses. The company purchases and develops land to be sold as residential, industrial, and commercial lots; develops, constructs, and leases retail, office, and industrial properties; and owns and leases residential, commercial, retail, and industrial properties. It also owns and manages three 18-hole championship golf courses. The company was founded in 1923 and is headquartered in Edmonton, Canada. 


      Company Analysis and Financial Data Status

      All financial data provided by Standard & Poor's Capital IQ.
      DataLast Updated (UTC time)
      Company Analysis2020/01/19 23:38
      End of Day Share Price2020/01/17 00:00
      Earnings2019/09/30
      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.