Discounted Cash Flow Calculation for DB:MZ4 using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
DB:MZ4 DCF 1st Stage: Next 10 year cash flow forecast
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Mitie Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
Mitie Group's share price is below the future cash flow value, and at a substantial discount (> 40%).
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Mitie Group's earnings available for a low price, and how does
this compare to other companies in the same industry?
Mitie Group's earnings are expected to grow significantly at over 20% yearly.
Mitie Group's revenue is expected to grow by 3.5% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Mitie Group's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
0/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Phillip Bentley, also known as Phil, has been the Chief Executive Officer of Mitie Group plc since December 12, 2016. Mr. Bentley served as the Chief Executive Officer and Executive Director of Cable & Wireless Communications Plc, parent company of Cable & Wireless Jamaica Limited from January 1, 2014 to May 16, 2016. He has Executive and non-executive experience with FTSE 100 public companies for over 15 years. He has Strategic and commercial experience, at both national and global level. He has Extensive executive and leadership experience from across industry. He has Extensive financial, audit and risk management systems experience. Mr. Bentley served as the Managing Director of British Gas Energy Services Ltd. from February 2007 to June 30, 2013. He served as the Chief Executive of British Gas Services Limited. He served as Group Finance Director of Centrica PLC from 2000 to February 2007 and its Managing Director of Europe from July 2004 to September 2006. He served as the Managing Director of Europe from July 2004 to September 2006. He served as a Finance Director of UDV-Guinness from 1999 to 2000 and also served as Group Treasurer and Director of Risk Management of Diageo plc since 1997 and Group Treasurer at Grand Metropolitan plc since 1995. He joined BP's graduate recruitment scheme in 1980, training as a Management accountant. He worked in China from 1983 to 1985, Egypt (1988-91) and the USA, before returning to the UK as Head of Capital Markets. He joined Grand Metropolitan in 1995, which became Diageo in 1997. He has been a Director of Mitie Group since November 1, 2016. He served as a Non-Executive Director of IMI plc since October 1, 2012 until December 31, 2014. He spent 15 years in finance roles at BP Plc. Mr. Bentley served as an Executive Director of Centrica plc from 2000 to 2013. He served as a Non-Executive Director of Kingfisher Plc from October 4, 2002 to March 17, 2010. He is Accountant by profession, with a Master's Degree from Oxford University and an MBA from INSEAD, Fontainebleau.
Phil's compensation has increased whilst company is loss making.
Phil's remuneration is higher than average for companies of similar size in Germany.
Management Team Tenure
Average tenure of the
management team in years:
The average tenure for the Mitie Group management team is less than 2 years, this suggests a new team.
Group CEO & Executive Director
Group CFO & Director
Chief Financial Transformation Officer
Chief Information Officer
Head of Investor Relations
General Counsel & Company Secretary
Chief Marketing & Strategy Officer
Group Human Resource Director
Managing Director of People Services for Total Security Management Business
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Mitie Group board of directors is less than 3 years, this suggests a new board.
Mitie Group plc, through its subsidiaries, provides strategic outsourcing services in the United Kingdom and internationally. It offers engineering services, such as technical and building maintenance services, as well as offers specialist services, such as heating, cooling, lighting, water treatment, and building controls; and security services and products, including security personnel, emergency mobile response solutions, and fire and security systems. The company also provides professional services, including capital project consultancy, energy consultancy, real estate advisory, records management consultancy, security and risk strategy, sustainability strategy, technical assets strategy, and workplace and design services; and cleaning and environmental services, such as pest control and landscaping services. In addition, it offers document management services; custody services, such as immigration and prison services; and indoor and outdoor event catering services. Further, the company provides property management services primarily to clients in the social housing sector; and painting and commercial refurbishment roofing services. Mitie Group plc was founded in 1987 and is headquartered in London, the United Kingdom.
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