LSE:MER

Stock Analysis Report

Executive Summary

Mears Group PLC, through its subsidiaries, provides a range of outsourced services to the public and private sectors in the United Kingdom.


Snowflake Analysis

Very undervalued established dividend payer.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-2.4%

MER

-3.5%

GB Commercial Services

-5.4%

GB Market


1 Year Return

2.9%

MER

20.5%

GB Commercial Services

2.0%

GB Market

Return vs Industry: MER underperformed the UK Commercial Services industry which returned 18.3% over the past year.

Return vs Market: MER exceeded the UK Market which returned 1.4% over the past year.


Shareholder returns

MERIndustryMarket
7 Day-2.4%-3.5%-5.4%
30 Day-4.3%-3.7%-4.2%
90 Day16.6%-0.05%-2.6%
1 Year8.1%2.9%24.1%20.5%7.6%2.0%
3 Year-37.4%-44.0%19.8%9.5%11.4%-2.7%
5 Year-22.2%-34.1%31.1%9.9%29.0%-0.6%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

Is Mears Group undervalued compared to its fair value and its price relative to the market?

37.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MER (£2.88) is trading below our estimate of fair value (£4.59)

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


Price To Earnings Ratio

PE vs Industry: MER is good value based on its PE Ratio (13.3x) compared to the Commercial Services industry average (20.4x).

PE vs Market: MER is good value based on its PE Ratio (13.3x) compared to the UK market (17.7x).


Price to Earnings Growth Ratio

PEG Ratio: MER is good value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: MER is good value based on its PB Ratio (1.6x) compared to the GB Commercial Services industry average (2.1x).


Next Steps

Future Growth

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

13.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MER's forecast earnings growth (13.9% per year) is above the savings rate (0.5%).

Earnings vs Market: MER's earnings (13.9% per year) are forecast to grow faster than the UK market (13% per year).

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

Revenue vs Market: MER's revenue (2.7% per year) is forecast to grow slower than the UK market (3.8% per year).

High Growth Revenue: MER's revenue (2.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MER's Return on Equity is forecast to be high in 3 years time (24%)


Next Steps

Past Performance

How has Mears Group performed over the past 5 years?

-1.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MER has high quality earnings.

Growing Profit Margin: MER's current net profit margins (2.5%) are higher than last year (2.5%).


Past Earnings Growth Analysis

Earnings Trend: MER's earnings have declined by -1.4% per year over the past 5 years.

Accelerating Growth: MER's earnings growth over the past year (8%) exceeds its 5-year average (-1.4% per year).

Earnings vs Industry: MER earnings growth over the past year (8%) underperformed the Commercial Services industry 17.1%.


Return on Equity

High ROE: MER's Return on Equity (12%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Mears Group's financial position?


Financial Position Analysis

Short Term Liabilities: MER's short term assets (£262.3M) exceed its short term liabilities (£243.5M).

Long Term Liabilities: MER's short term assets (£262.3M) exceed its long term liabilities (£255.3M).


Debt to Equity History and Analysis

Debt Level: MER's debt to equity ratio (43.5%) is considered high.

Reducing Debt: MER's debt to equity ratio has increased from 38.2% to 43.5% over the past 5 years.

Debt Coverage: MER's debt is well covered by operating cash flow (46.3%).

Interest Coverage: MER's interest payments on its debt are well covered by EBIT (4.9x coverage).


Balance Sheet

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

Debt Coverage by Assets: MER's debt is covered by short term assets (assets are 3x debt).


Next Steps

Dividend

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

4.31%

Current Dividend Yield


Dividend Yield vs Market

company4.3%marketbottom25%1.9%markettop25%5.4%industryaverage2.7%forecastin3Years5.0%

Current dividend yield vs market & industry

Notable Dividend: MER's dividend (4.31%) is higher than the bottom 25% of dividend payers in the UK market (1.9%).

High Dividend: MER's dividend (4.31%) is low compared to the top 25% of dividend payers in the UK market (5.34%).


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (57.8%), MER's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MER's dividends in 3 years are forecast to be well covered by earnings (44.6% payout ratio).


Next Steps

Management

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

9.3yrs

Average management tenure


CEO

David Miles (53yo)

9.3yrs

Tenure

UK£455,000

Compensation

Mr. David J. Miles has been Chief Executive Officer of Mears Group plc since November 25, 2010 and served as its Chief Operating Officer since August 2009. Mr. Miles served as a Managing Director of Mears  ...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD591.95K) is about average for companies of similar size in the UK market ($USD840.76K).

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


Leadership Team

NamePositionTenureCompensationOwnership
David Miles
CEO & Director9.3yrsUK£455.00k0.16% £504.0k
Andrew C. Smith
Group Finance Director & Executive Director12.9yrsUK£303.00k0.12% £374.4k
Alan Long
Executive Director10.5yrsUK£254.00k0.033% £104.3k
John Taylor
Chief Operating Officer0yrsno datano data
Tanya Srikandan
Head of Commercial0yrsno datano data
Jonathan Mallen-Beadle
Managing Director of Mears Living0.3yrsno datano data
Ben Westran
Company Secretary0yrsno datano data
Bernadette Walsh
Chief Operating Officer of Mears Care0yrsno datano data
Jane Nelson
Executive Director0yrsno datano data

9.3yrs

Average Tenure

53yo

Average Age

Experienced Management: MER's management team is seasoned and experienced (9.3 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
David Miles
CEO & Director9.3yrsUK£455.00k0.16% £504.0k
Andrew C. Smith
Group Finance Director & Executive Director12.9yrsUK£303.00k0.12% £374.4k
Alan Long
Executive Director10.5yrsUK£254.00k0.033% £104.3k
Kieran Murphy
Chairman1.1yrsno datano data
Jim Clarke
Non-Executive Director0.6yrsno datano data
Christopher Loughlin
Non-Executive Director0.4yrsno datano data
Julia Unwin
Senior Independent Non-Executive Director0yrsUK£70.00kno data
Geraint Davies
Non-Executive Director4.3yrsUK£70.00k0.0023% £7.2k
Jason Burt
Non-Executive Director2.7yrsUK£70.00kno data
Roy Irwin
Non-Executive Deputy Chairman0yrsUK£70.00kno data

3.5yrs

Average Tenure

59.5yo

Average Age

Experienced Board: MER's board of directors are considered experienced (3.5 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.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 4.2%.


Top Shareholders

Company Information

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


Key Information

  • Name: Mears Group plc
  • Ticker: MER
  • Exchange: LSE
  • Founded: 1996
  • Industry: Diversified Support Services
  • Sector: Commercial Services
  • Market Cap: UK£318.213m
  • Shares outstanding: 110.49m
  • Website: https://www.mearsgroup.co.uk

Number of Employees


Location

  • Mears Group plc
  • 1390 Montpellier Court
  • Gloucester Business Park
  • Gloucester
  • Gloucestershire
  • GL3 4AH
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MM7DB (Deutsche Boerse AG)YesOrdinary SharesDEEUROct 1996
MERLSE (London Stock Exchange)YesOrdinary SharesGBGBPOct 1996
MERLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPOct 1996

Biography

Mears Group PLC, through its subsidiaries, provides a range of outsourced services to the public and private sectors in the United Kingdom. It operates in two segments, Housing and Care. The company offers rapid response and planned maintenance services to local authorities and registered social landlords, including responsive repairs; gas and voids services; maintenance, repairs, capital works, and energy investment solutions for public buildings; estate cleaning services; and grounds maintenance, hard landscaping, soft landscaping, and arboriculture. It also provides individual or archetypal energy and carbon assessments, and private sector finance; installation services, such as insulation, glazing, heating, lighting, and renewable services; and monitoring and aftercare services. In addition, the company offers housing management services; new build housing solutions; and a range of home improvement services comprising advice and information, home improvements, disabled facilities grants, aids and adaptations, energy efficiency, small repairs, stair lifts, and home from hospital services, as well as minor adaptations that include ramps. Further, it provides facilities management and insourcing solutions; estate management services; student residences; care services, which comprise personal care, cooking, cleaning, medication, or shopping for older and disabled people; and training, house building, insurance, and professional services. The company was incorporated in 1996 and is headquartered in Gloucester, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/26 21:32
End of Day Share Price2020/02/26 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.