LSE:MGNS

Stock Analysis Report

Executive Summary

Morgan Sindall Group plc operates as a construction and regeneration company in the United Kingdom.

Rewards

Trading at 57% below its fair value

Earnings are forecast to grow 4.48% per year

Earnings grew by 21.3% over the past year

Risk Analysis

Unstable dividend track record

Highly volatile share price over past 3 months



Snowflake Analysis

Flawless balance sheet with proven track record and pays a dividend.


Similar Companies

Share Price & News

How has Morgan Sindall Group's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

6.0%

MGNS

1.1%

GB Construction

-1.1%

GB Market


1 Year Return

60.8%

MGNS

-16.4%

GB Construction

12.7%

GB Market

Return vs Industry: MGNS exceeded the UK Construction industry which returned -15.6% over the past year.

Return vs Market: MGNS exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

MGNSIndustryMarket
7 Day6.0%1.1%-1.1%
30 Day12.2%-12.1%0.07%
90 Day40.0%4.5%6.2%
1 Year68.2%60.8%-1.6%-16.4%18.6%12.7%
3 Year145.2%118.7%-18.7%-39.8%21.8%6.2%
5 Year224.2%168.4%-1.5%-37.2%42.4%9.6%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Morgan Sindall Group 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: MGNS (£16.46) is trading below our estimate of fair value (£38.24)

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


Price To Earnings Ratio

PE vs Industry: MGNS is poor value based on its PE Ratio (10.5x) compared to the Construction industry average (10.4x).

PE vs Market: MGNS is good value based on its PE Ratio (10.5x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: MGNS is poor value based on its PEG Ratio (2.3x)


Price to Book Ratio

PB vs Industry: MGNS is overvalued based on its PB Ratio (2.1x) compared to the GB Construction industry average (1.5x).


Next Steps

Future Growth

How is Morgan Sindall Group forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

4.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MGNS's forecast earnings growth (4.5% per year) is above the savings rate (0.5%).

Earnings vs Market: MGNS's earnings (4.5% per year) are forecast to grow slower than the UK market (11.7% per year).

High Growth Earnings: MGNS's earnings are forecast to grow, but not significantly.

Revenue vs Market: MGNS's revenue (2.4% per year) is forecast to grow slower than the UK market (3.6% per year).

High Growth Revenue: MGNS's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MGNS's Return on Equity is forecast to be low in 3 years time (18.9%).


Next Steps

Past Performance

How has Morgan Sindall Group performed over the past 5 years?

41.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MGNS has high quality earnings.

Growing Profit Margin: MGNS's current net profit margins (2.4%) are higher than last year (2%).


Past Earnings Growth Analysis

Earnings Trend: MGNS's earnings have grown significantly by 41.4% per year over the past 5 years.

Accelerating Growth: MGNS's earnings growth over the past year (21.3%) is below its 5-year average (41.4% per year).

Earnings vs Industry: MGNS earnings growth over the past year (21.3%) exceeded the Construction industry -13.7%.


Return on Equity

High ROE: MGNS's Return on Equity (19.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Morgan Sindall Group's financial position?


Financial Position Analysis

Short Term Liabilities: MGNS's short term assets (£986.7M) exceed its short term liabilities (£912.6M).

Long Term Liabilities: MGNS's short term assets (£986.7M) exceed its long term liabilities (£98.1M).


Debt to Equity History and Analysis

Debt Level: MGNS's debt to equity ratio (0.4%) is considered satisfactory.

Reducing Debt: MGNS's debt to equity ratio has reduced from 14.6% to 0.4% over the past 5 years.

Debt Coverage: MGNS's debt is well covered by operating cash flow (3593.8%).

Interest Coverage: MGNS's interest payments on its debt are well covered by EBIT (22.5x coverage).


Balance Sheet

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

Debt Coverage by Assets: MGNS's debt is covered by short term assets (assets are 616.7x debt).


Next Steps

Dividend

What is Morgan Sindall Group's current dividend yield, its reliability and sustainability?

2.95%

Current Dividend Yield


Dividend Yield vs Market

company2.9%marketbottom25%1.8%markettop25%5.0%industryaverage4.1%forecastin3Years3.6%

Current dividend yield vs market & industry

Notable Dividend: MGNS's dividend (3.22%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: MGNS's dividend (3.22%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (35%), MGNS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MGNS's dividends in 3 years are forecast to be well covered by earnings (37.9% payout ratio).


Next Steps

Management

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

7.0yrs

Average management tenure


CEO

John Morgan (63yo)

7.2yrs

Tenure

UK£2,353,000

Compensation

Mr. John Christopher Morgan Founded Morgan Sindall Group plc and has been its Chief Executive Officer since November 6, 2012. Mr. Morgan served as the Chief Executive Officer of Morgan Sindall Plc from 199 ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD3.06M) is above average for companies of similar size in the UK market ($USD1.13M).

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


Management Age and Tenure

7.0yrs

Average Tenure

Experienced Management: MGNS's management team is seasoned and experienced (7 years average tenure).


Board Age and Tenure

3.7yrs

Average Tenure

58.5yo

Average Age

Experienced Board: MGNS's board of directors are considered experienced (3.7 years average tenure).


Insider Trading

Insider Buying: MGNS insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUK£4,092,00011 Nov 19
John Morgan
EntityIndividual
Role
Chief Executive Officer
Founder
Shares300,000
Max PriceUK£13.64

Ownership Breakdown

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


Management Team

  • Steve Crummett (54yo)

    Finance Director & Director

    • Tenure: 6.9yrs
    • Compensation: UK£1.87m
  • John Morgan (63yo)

    Founder

    • Tenure: 7.2yrs
    • Compensation: UK£2.35m
  • Chris Booth

    Managing Director of Fit Out

    • Tenure: 7yrs
  • Matt Crompton

    Managing Director of Urban Regeneration

    • Camilla Aitchison

      Director of People

      • Les Turner

        Head of Supply Chain Utility Services - Construction and Infrastructure Division

        • Martin Lubieniecki

          Managing Director of BakerHicks (design)

          • Pat Boyle

            Managing Director of Construction & Infrastructure’s construction Business

            • Tenure: 6yrs
          • Helen Mason

            General Counsel

            • Catherine Beaumont

              Communications Manager


              Board Members

              • Steve Crummett (54yo)

                Finance Director & Director

                • Tenure: 6.9yrs
                • Compensation: UK£1.87m
              • Michael Findlay (51yo)

                Chairman

                • Tenure: 3.3yrs
                • Compensation: UK£170.00k
              • David Lowden (62yo)

                Senior Independent Director

                • Tenure: 1yrs
                • Compensation: UK£16.00k
              • John Morgan (63yo)

                Founder

                • Tenure: 7.2yrs
                • Compensation: UK£2.35m
              • Malcolm Cooper (60yo)

                Non-Executive Director

                • Tenure: 4.2yrs
                • Compensation: UK£58.00k
              • Tracey Killen (57yo)

                Non-Executive Director

                • Tenure: 2.7yrs
                • Compensation: UK£46.00k

              Company Information

              Morgan Sindall Group plc's company bio, employee growth, exchange listings and data sources


              Key Information

              • Name: Morgan Sindall Group plc
              • Ticker: MGNS
              • Exchange: LSE
              • Founded: 1953
              • Industry: Construction and Engineering
              • Sector: Capital Goods
              • Market Cap: UK£804.055m
              • Shares outstanding: 44.72m
              • Website: https://www.morgansindall.com

              Number of Employees


              Location

              • Morgan Sindall Group plc
              • Kent House
              • 14-17 Market Place
              • London
              • Greater London
              • W1W 8AJ
              • United Kingdom

              Listings

              TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
              MGNSLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
              MGNSLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992

              Biography

              Morgan Sindall Group plc operates as a construction and regeneration company in the United Kingdom. The company operates in six divisions: Construction & Infrastructure, Fit Out, Property Services, Partnership Housing, Urban Regeneration, and Investments. The Construction & Infrastructure division offers infrastructure services to highways, rail, aviation, energy, water, and nuclear markets; and construction services in education, healthcare, defence, commercial, industrial, leisure, and retail markets. This division also offers multi-disciplinary engineering and design consultancy services. The Fit Out division specializes in fit out and refurbishment projects in commercial, central, and local government offices, as well as education, and retail banking markets This division also provides office interior design and build services. The Property Services division offers planned asset management and responsive maintenance services to social housing and the public sector. The Partnership Housing division engages in the mixed-tenure development; building and developing homes for open market; sale and affordable rent; design and build contracting; and planned maintenance and refurbishment activities. The Urban Regeneration division works with landowners and public sector partners to transform the urban landscape through the development of multi-phase sites and mixed-use regeneration, including residential, commercial, retail, and leisure facilities. The Investments division provides opportunities across construction and regeneration activities. The company was incorporated in 1953 and is based in London, the United Kingdom. 


              Company Analysis and Financial Data Status

              All financial data provided by Standard & Poor's Capital IQ.
              DataLast Updated (UTC time)
              Company Analysis2020/01/24 20:36
              End of Day Share Price2020/01/24 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.