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Mears Group

LSE:MER
Snowflake Description

Flawless balance sheet, undervalued and pays a dividend.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
MER
LSE
£323M
Market Cap
  1. Home
  2. GB
  3. Commercial Services
Company description

Mears Group PLC, through its subsidiaries, provides a range of outsourced services to the public and private sectors in the United Kingdom. The last earnings update was 171 days ago. More info.


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MER Share Price and Events
Price Volatility
MER
Industry
5yr Volatility vs Market

MER Value

 Is Mears Group undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Mears Group to its discounted cash flow analysis.value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Raw Data

Below are the data sources, inputs and calculation used to determine the intrinsic value for Mears Group.

LSE:MER Discounted Cash Flow Data Sources
Data Point Source Value
Valuation Model 2 Stage Free Cash Flow to Equity
Levered Free Cash Flow Average of 4 Analyst Estimates (S&P Global) See below
Discount Rate (Cost of Equity) See below 8.3%
Perpetual Growth Rate 10-Year GB Government Bond Rate 1.4%

An important part of a discounted cash flow is the discount rate, below we explain how it has been calculated.

Calculation of Discount Rate/ Cost of Equity for LSE:MER
Data Point Calculation/ Source Result
Risk-Free Rate 10-Year GB Govt Bond Rate 1.4%
Equity Risk Premium S&P Global 8.6%
Commercial Services Unlevered Beta Simply Wall St/ S&P Global 0.49
Re-levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
= 0.487 (1 + (1- 19%) (16%))
0.55
Levered Beta Levered Beta limited to 0.8 to 2.0
(practical range for a stable firm)
0.8
Discount Rate/ Cost of Equity = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
= 1.4% + (0.8 * 8.6%)
8.28%

Discounted Cash Flow Calculation for LSE:MER using 2 Stage Free Cash Flow to Equity Model

The calculations below outline how an intrinsic value for Mears Group is arrived at by discounting future cash flows to their present value using the 2 stage method. We use analyst's estimates of cash flows going forward 5 years for the 1st stage, the 2nd stage assumes the company grows at a stable rate into perpetuity.

LSE:MER DCF 1st Stage: Next 5 year cash flow forecast
2018 2019 2020 2021 2022
Levered FCF (GBP, Millions) 29.82 37.00 40.54 42.41 44.35
Source Analyst x4 Analyst x4 Analyst x3 Extrapolated @ (4.59%) Extrapolated @ (4.59%)
Present Value
Discounted (@ 8.28%)
27.54 31.56 31.94 30.85 29.80
Present value of next 5 years cash flows £152
LSE:MER DCF 2nd Stage: Terminal Value
Calculation Result
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
= £44 × (1 + 1.4%) ÷ (8.28% – 1.4%)
£653
Present Value of Terminal Value = Terminal Value ÷ (1 + r)5
= £653 ÷ (1 + 8.28%)5
£439
LSE:MER Total Equity Value
Calculation Result
Total Equity Value = Present value of next 5 years cash flows + Terminal Value
= £152 + £439
£591
Equity Value per Share
(GBP)
= Total value / Shares Outstanding
= £591 / 104
£5.7
LSE:MER Discount to Share Price
Calculation Result
Value per share (GBP) From above. £5.70
Current discount Discount to share price of £3.13
= -1 x (£3.13 - £5.70) / £5.70
45.1%

Learn more about our DCF calculations in Simply Wall St’s analysis model .

Current Discount
Amount off the current price Mears Group is available for.
Intrinsic value
45%
Share price is £3.13 vs Future cash flow value of £5.7
Current Discount Checks
For Mears Group to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
  • Mears Group's share price is below the future cash flow value, and at a moderate discount (> 20%).
  • Mears 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 Mears Group's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Mears Group's earnings available for a low price, and how does this compare to other companies in the same industry?
Raw Data
LSE:MER PE (Price to Earnings) Ratio Data Sources
Data Point Source Value
Earnings Per Share * Company Filings () in GBP £0.20
LSE:MER Share Price ** LSE (2018-06-18) in GBP £3.13
United Kingdom of Great Britain and Northern Ireland Commercial Services Industry PE Ratio Median Figure of 24 Publicly-Listed Commercial Services Companies 21.06x
United Kingdom of Great Britain and Northern Ireland Market PE Ratio Median Figure of 880 Publicly-Listed Companies 17.27x

* Trailing twelve months (TTM) annual GAAP earnings per share excluding extraordinary items.

** Primary Listing of Mears Group.

LSE:MER PE (Price to Earnings) Ratio Calculation
Calculation Outcome
PE Ratio

= LSE:MER Share Price ÷ EPS (both in GBP)

= 3.13 ÷ 0.20

15.44x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Mears Group is good value based on earnings compared to the GB Commercial Services industry average.
  • Mears Group is good value based on earnings compared to the United Kingdom of Great Britain and Northern Ireland market.
Price based on expected Growth
Does Mears Group's expected growth come at a high price?
Raw Data
LSE:MER PEG (Price to Earnings to Growth) Ratio Data Sources
Data Point Source Value
PE Ratio See PE Ratio Section 15.44x
Net Income Annual Growth Rate See Future Growth Section.
Line of Best Fit* through Consensus Estimate Earnings of 4 Analysts
15.1%per year
United Kingdom of Great Britain and Northern Ireland Commercial Services Industry PEG Ratio Median Figure of 18 Publicly-Listed Commercial Services Companies 1.74x
United Kingdom of Great Britain and Northern Ireland Market PEG Ratio Median Figure of 609 Publicly-Listed Companies 1.58x

*Line of best fit is calculated by linear regression .

LSE:MER PEG (Price to Earnings to Growth) Ratio Calculation
Calculation Outcome
PEG Ratio

= PE Ratio ÷ Net Income Annual Growth Rate

= 15.44x ÷ 15.1%

1.02x

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Mears Group is poor value based on expected growth next year.
Price based on value of assets
What value do investors place on Mears Group's assets?
Raw Data
LSE:MER PB (Price to Book) Ratio Data Sources
Data Point Source Value
Book Value per Share Company Filings () in GBP £2.02
LSE:MER Share Price * LSE (2018-06-18) in GBP £3.13
United Kingdom of Great Britain and Northern Ireland Commercial Services Industry PB Ratio Median Figure of 38 Publicly-Listed Commercial Services Companies 1.87x
United Kingdom of Great Britain and Northern Ireland Market PB Ratio Median Figure of 1,502 Publicly-Listed Companies 1.75x
LSE:MER PB (Price to Book) Ratio Calculation
Calculation Outcome
PB Ratio

= LSE:MER Share Price ÷ Book Value per Share (both in GBP)

= 3.13 ÷ 2.02

1.55x

* Primary Listing of Mears Group.

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Mears Group is good value based on assets compared to the GB Commercial Services industry average.
X
Value checks
We assess Mears Group's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) ( Click here or on bar chart for details of DCF calculation. )
  2. Is the PE ratio less than the market average, and/ or less than the Commercial Services industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Commercial Services industry average (and greater than 0)? (1 check)
  5. Mears Group has a total score of 5/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (21.32%).

    Full details on the Value part of the Simply Wall St company analysis model.

MER Future Performance

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

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Annual Growth Rate
15.1%
Expected annual growth in earnings.
Earnings growth vs Low Risk Savings
Is Mears Group expected to grow at an attractive rate?
  • Mears Group's earnings growth is expected to exceed the low risk savings rate of 1.4%.
Growth vs Market Checks
  • Mears Group's earnings growth is expected to exceed the United Kingdom of Great Britain and Northern Ireland market average.
  • Mears Group's revenue growth is positive but not above the United Kingdom of Great Britain and Northern Ireland market average.
Annual Growth Rates Comparison
Raw Data
LSE:MER Future Growth Rates Data Sources
Data Point Source Value (per year)
LSE:MER Future Earnings Growth Rate Line of Best Fit* through Consensus Estimate Earnings of 4 Analysts 15.1%
LSE:MER Future Revenue Growth Rate Line of Best Fit* through Consensus Estimate Revenue of 4 Analysts 3.2%
United Kingdom of Great Britain and Northern Ireland Commercial Services Industry Earnings Growth Rate Market Cap Weighted Average 4.8%
United Kingdom of Great Britain and Northern Ireland Commercial Services Industry Revenue Growth Rate Market Cap Weighted Average 3.8%
United Kingdom of Great Britain and Northern Ireland Market Earnings Growth Rate Market Cap Weighted Average 9.9%
United Kingdom of Great Britain and Northern Ireland Market Revenue Growth Rate Market Cap Weighted Average 4.5%

*Line of best fit is calculated by linear regression .

Industry and Market average data is calculated daily.

Learn more about our growth rate calculations in Simply Wall St’s analysis model.

Analysts growth expectations
Raw Data
LSE:MER Analysts Growth Expectations Data Sources
Data Point Source Value
Past Financials Company Filings (5 months ago) See Below
Future Estimates Average of up to 4 Analyst Estimates (S&P Global) See Below
All numbers in GBP Millions and using Trailing twelve months (TTM) annual period rather than quarterly.
LSE:MER Future Estimates Data
Date (Data in GBP Millions) Revenue Cash Flow Net Income * Avg. No. Analysts
2020-12-31 986 46 32 4
2019-12-31 942 47 34 4
2018-12-31 902 39 29 4
LSE:MER Past Financials Data
Date (Data in GBP Millions) Revenue Cash Flow Net Income *
2017-12-31 900 16 21
2017-06-30 945 25 21
2017-03-31 942 26 21
2016-12-31 940 26 22
2016-06-30 917 31 19
2016-03-31 899 32 20
2015-12-31 881 34 21
2015-06-30 841 43 27
2015-03-31 840 43 26

*GAAP earnings excluding extraordinary items.

Super high growth metrics
High Growth Checks
  • Mears Group's earnings are expected to grow by 15.1% yearly, however this is not considered high growth (20% yearly).
  • Mears Group's revenue is expected to grow by 3.2% 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.
Raw Data
LSE:MER Past and Future Earnings per Share
Data Point Source Value
Past Financials Company Filings (5 months ago) See Below
Future Estimates Average of up to 4 Analyst Estimates (S&P Global) See Below

All data from Mears Group Company Filings, last reported 5 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

LSE:MER Future Estimates Data
Date (Data in GBP Millions) EPS * EPS High Estimate EPS Low Estimate Avg. No. Analysts
2020-12-31 0.30 0.30 0.30 1.00
2019-12-31 0.28 0.28 0.28 1.00
2018-12-31 0.25 0.25 0.25 1.00
LSE:MER Past Financials Data
Date (Data in GBP Millions) EPS *
2017-12-31 0.20
2017-06-30 0.21
2017-03-31 0.21
2016-12-31 0.21
2016-06-30 0.19
2016-03-31 0.20
2015-12-31 0.20
2015-06-30 0.26
2015-03-31 0.26

*GAAP earnings excluding extraordinary items.

Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • Mears Group is not expected to efficiently use shareholders’ funds in the future (Return on Equity less than 20%).
X
Future performance checks
We assess Mears Group's future performance by looking at:
  1. Is the annual earnings growth rate expected to beat the low risk savings rate, plus a premium to keep pace with inflation?
  2. Is the annual earnings growth rate expected to beat the average growth rate in earnings of the United Kingdom of Great Britain and Northern Ireland market? (1 check)
  3. Is the annual revenue growth rate expected to beat the average growth rate in revenue of the United Kingdom of Great Britain and Northern Ireland market? (1 check)
  4. Is the annual earnings growth rate expected to be above 20%? (1 check)
  5. Is the annual revenue growth rate expected to be above 20%? (1 check)
  6. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Mears Group has a total score of 2/6, see the detailed checks below.

Note 1: We use GAAP Net Income Excluding Exceptional Items for our Earnings in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

MER Past Performance

  How has Mears Group performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Mears Group's growth in the last year to its industry (Commercial Services).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Mears Group's year on year earnings growth rate has been positive over the past 5 years.
  • Mears Group's 1-year earnings growth is negative, it can't be compared to the 5-year average.
  • Mears Group's 1-year earnings growth is negative, it can't be compared to the GB Commercial Services industry average.
Earnings and Revenue History
Mears Group's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Raw Data

All data from Mears Group Company Filings, last reported 5 months ago, and in Trailing twelve months (TTM) annual period rather than quarterly.

LSE:MER Past Revenue, Cash Flow and Net Income Data
Date (Data in GBP Millions) Revenue Net Income * G+A Expenses R&D Expenses
2017-12-31 900.18 20.91 184.23
2017-06-30 944.73 21.43 197.33
2017-03-31 942.41 21.48 199.71
2016-12-31 940.10 21.53 202.10
2016-06-30 917.27 19.48 201.24
2016-03-31 899.20 20.08 197.00
2015-12-31 881.14 20.67 192.76
2015-06-30 840.69 26.56 179.54
2015-03-31 839.72 25.92 179.89
2014-12-31 838.74 25.29 180.23
2014-09-30 846.65 23.95 180.90
2014-06-30 854.55 22.62 181.57
2014-03-31 860.06 19.92 181.60
2013-12-31 865.57 17.22 181.63
2013-06-30 749.09 14.79 172.16
2013-03-31 683.16 16.66 158.58
2012-12-31 617.24 18.53 145.00
2012-09-30 641.55 18.08 143.62
2012-06-30 603.57 17.32 136.95
2012-03-31 596.27 17.11 138.91
2011-12-31 588.97 16.91 140.88
2011-09-30 576.45 17.38 135.71
2011-06-30 563.94 17.84 130.53

*GAAP earnings excluding extraordinary items.

Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Mears Group has not efficiently used shareholders’ funds last year (Return on Equity less than 20%).
  • Mears Group used its assets less efficiently than the GB Commercial Services industry average last year based on Return on Assets.
  • Mears Group's use of capital has not improved over the past 3 years (Return on Capital Employed).
X
Past performance checks
We assess Mears Group's performance over the past 5 years by checking for:
  1. Has earnings increased in past 5 years? (1 check)
  2. Has the earnings growth in the last year exceeded that of the Commercial Services industry? (1 check)
  3. Is the recent earnings growth over the last year higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. 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.
Mears Group has a total score of 1/6, see the detailed checks below.

Note: We use GAAP Net Income excluding extraordinary items in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

MER Health

 How is Mears Group's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Mears Group's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Mears Group is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Mears Group's cash and other short term assets cover its long term commitments.
Balance sheet
This treemap shows a more detailed breakdown of Mears Group's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • Low level of unsold assets.
  • Debt is covered by short term assets, assets are 4.1x debt.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
Raw Data

All data from Mears Group Company Filings, last reported 5 months ago.

LSE:MER Past Debt and Equity Data
Date (Data in GBP Millions) Total Equity Total Debt Cash & Short Term Investments
2017-12-31 209.59 51.74 24.77
2017-06-30 201.69 95.63 75.37
2017-03-31 201.69 95.63 75.37
2016-12-31 198.67 66.48 52.90
2016-06-30 195.12 69.76 53.67
2016-03-31 195.12 69.76 53.67
2015-12-31 191.63 69.05 68.61
2015-06-30 202.13 68.78 63.61
2015-03-31 202.13 68.78 63.61
2014-12-31 194.46 64.68 66.63
2014-09-30 194.46 64.68 66.63
2014-06-30 185.06 70.83 72.66
2014-03-31 185.06 70.83 72.66
2013-12-31 180.30 81.18 79.55
2013-06-30 188.05 81.76 58.33
2013-03-31 188.05 81.76 58.33
2012-12-31 168.82 72.53 57.62
2012-09-30 168.82 72.53 57.62
2012-06-30 156.81 67.27 58.79
2012-03-31 156.81 67.27 58.79
2011-12-31 151.79 61.77 46.57
2011-09-30 151.79 61.77 46.57
2011-06-30 146.14 55.00 45.61
  • Mears Group's level of debt (24.7%) compared to net worth is satisfactory (less than 40%).
  • The level of debt compared to net worth has been reduced over the past 5 years (43% vs 24.7% today).
  • Debt is well covered by operating cash flow (30%, greater than 20% of total debt).
  • Interest payments on debt are well covered by earnings (EBIT is 12x coverage).
X
Financial health checks
We assess Mears Group's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by operating cash flow? (1 check)
  6. Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
  7. Mears Group has a total score of 6/6, see the detailed checks below.
For companies that are loss making and have been so on average in the past we replace the last 2 checks with:
  1. Does cash and short term investments cover stable operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)
  2. Does cash and short term investments cover growing operating expenses (recurring G&A and R&D) for more than 3 years? (1 check)


Full details on the Health part of the Simply Wall St company analysis model.

MER Dividends

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

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
3.83%
Current annual income from Mears Group dividends. Estimated to be 4.82% next year.
If you bought £2,000 of Mears Group shares you are expected to receive £77 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Mears Group's pays a higher dividend yield than the bottom 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (1.7%).
  • Mears Group's dividend is below the markets top 25% of dividend payers in United Kingdom of Great Britain and Northern Ireland (4.39%).
Annualized Historical and Future Dividends
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
Raw Data
LSE:MER Annualized Past and Future Dividends
Data Point Source Value
Past Annualized Dividend Yield S&P Global Market Data See Below
Past Dividends per Share Company Filings/ Annualized Dividend Payments See Below
Future Dividends per Share Estimates Average of up to 4 Analyst Estimates (S&P Global) See Below
United Kingdom of Great Britain and Northern Ireland Commercial Services Industry Average Dividend Yield Market Cap Weighted Average of 24 Stocks 2.6%
United Kingdom of Great Britain and Northern Ireland Market Average Dividend Yield Market Cap Weighted Average of 747 Stocks 3.9%
United Kingdom of Great Britain and Northern Ireland Minimum Threshold Dividend Yield 10th Percentile 1%
United Kingdom of Great Britain and Northern Ireland Bottom 25% Dividend Yield 25th Percentile 1.7%
United Kingdom of Great Britain and Northern Ireland Top 25% Dividend Yield 75th Percentile 4.4%

Industry and Market average data is calculated daily.

Note all dividend per share amounts are annualized and not quarterly or other period.

LSE:MER Future Dividends Estimate Data
Date (Data in £) Dividend per Share (annual) Avg. No. Analysts
2020-12-31 0.16 4.00
2019-12-31 0.15 4.00
2018-12-31 0.14 4.00
LSE:MER Past Annualized Dividends Data
Date (Data in £) Dividend per share (annual) Avg. Yield (%)
2018-06-07 0.120 3.798
2017-04-10 0.117 2.800
2017-03-21 0.117 2.325
2016-04-12 0.110 2.514
2016-03-15 0.110 2.649
2015-04-20 0.100 2.401
2015-03-17 0.100 2.280
2014-04-11 0.088 1.994
2014-03-18 0.088 1.703
2013-03-19 0.080 1.944
2012-03-20 0.075 2.563
2012-02-28 0.075 3.026
2011-04-15 0.068 2.694
2011-03-15 0.068 2.664
2010-03-09 0.057 2.010
2010-03-01 0.057 2.185
2009-03-10 0.048 1.856
2008-08-19 0.043 1.639
2008-06-23 0.040 1.448

Learn more about our ratios and growth rates in Simply Wall St’s analysis model >

  • Dividends per share have been stable in the past 10 years.
  • Dividends per share have increased over the past 10 years.
Current Payout to shareholders
What portion of Mears Group's earnings are paid to the shareholders as a dividend.
  • Dividends paid are covered by net profit (1.7x coverage).
Future Payout to shareholders
  • Dividends after 3 years are expected to be well covered by net profit (2.4x coverage).
X
Income/ dividend checks
We assess Mears Group's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 1%) - if not then the rest of the checks are ignored.
  2. Is current dividend yield above the bottom 25% of dividend payers? (1 check)
  3. Is current dividend yield above the top 25% of dividend payers? (1 check)
  4. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  5. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  6. How sustainable is the dividend, can Mears Group afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  7. Mears Group has a total score of 5/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

MER Management

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

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.
CEO
David Miles, image provided by Google.
David Miles
COMPENSATION £436,000
AGE 51
TENURE AS CEO 7.6 years
CEO Bio

Mr. David J. Miles has been Chief Executive Officer of Mears Group plc since November 25, 2010 and has been its Chief Operating Officer since August 2009. Mr. Miles served as a Managing Director of Mears Social Housing until August 2009. Mr. Miles has been with Mears since May 1996 and served as Managing Director of Mears Southern Social Housing division. Mr. Miles has been a Director at Mears Group plc since January 30, 2007. He serves as a Director of Mears Limited, Mears Building Contractors Limited and Evolve Housing Limited. He held a senior position with MITIE Maintenance (South East) Limited. His background is electrical engineering.

CEO Compensation
  • David's compensation has been consistent with company performance over the past year.
  • David's compensation appears reasonable for a company of this size and profit level.
Management Team

David Miles

TITLE
CEO, COO & Director
COMPENSATION
£436K
AGE
51
TENURE
7.6 yrs

Andrew C. Smith

TITLE
Finance Director & Executive Director
COMPENSATION
£285K
AGE
45
TENURE
10.3 yrs

Alan Long

TITLE
Executive Director
COMPENSATION
£239K
AGE
54

Ben Westran

TITLE
Company Secretary
AGE
40

Bernadette Walsh

TITLE
Chief Operating Officer of Mears Care
AGE
55

Jane Nelson

TITLE
Executive Director
Board of Directors Tenure

Average tenure and age of the Mears Group board of directors in years:

2.7
Average Tenure
60
Average Age
  • The average tenure for the Mears Group board of directors is less than 3 years, this suggests a new board.
Board of Directors

Bob Holt

TITLE
Chairman
COMPENSATION
£345K
AGE
62
TENURE
22.4 yrs

David Miles

TITLE
CEO, COO & Director
COMPENSATION
£436K
AGE
51
TENURE
11.4 yrs

Peter Dicks

TITLE
Non-Executive Deputy Chairman & Senior Independent Non-Executive Director
COMPENSATION
£45K
AGE
74

Andrew C. Smith

TITLE
Finance Director & Executive Director
COMPENSATION
£285K
AGE
45
TENURE
11.3 yrs

Alan Long

TITLE
Executive Director
COMPENSATION
£239K
AGE
54
TENURE
8.8 yrs

Geraint Davies

TITLE
Independent Non-Executive Director
COMPENSATION
£45K
AGE
62
TENURE
2.7 yrs

Julia Unwin

TITLE
Independent Non-Executive Director
COMPENSATION
£45K
AGE
60
TENURE
2.4 yrs

Jason Burt

TITLE
Independent Non-Executive Director
AGE
51
TENURE
1 yrs

Roy Irwin

TITLE
Independent Non-Executive Director
AGE
62
TENURE
1 yrs

Liz Corrado

TITLE
Independent Non-Executive Director
TENURE
0.8 yrs
Recent Insider Trading
  • No 3 month insider trading information.
Who owns this company?
X
Management checks
We assess Mears Group's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Mears Group has a total score of 0/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions .

Full details on the Management part of the Simply Wall St company analysis model.

MER News

External News
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Simply Wall St News

Why Mears Group plc (LON:MER) Is Truly A Standout Investment

Attractive stocks have exceptional fundamentals. … In the case of Mears Group plc (LON:MER), there's … track record

Simply Wall St -

Only 5 Days Left Before Mears Group plc (LON:MER) Will Start Trading Ex-Dividend, Should Investors Buy?

Important news for shareholders and potential investors in Mears Group plc (LON:MER): The dividend payment of £0.086 per share will be distributed into shareholder on 05 July 2018, and the stock will begin trading ex-dividend at an earlier date, 14 June 2018. … Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? … Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

Simply Wall St -

Is Mears Group plc's (LON:MER) Future Growth Already Accounted For In Today's Price?

Mears Group plc (LSE:MER) is a stock well-positioned for future growth, but many investors are wondering whether its last closing price of £3.24 is based on unrealistic expectations. … See our latest analysis for Mears Group What can we expect from Mears Group in the future? … A PE ratio of 15.98x and expected year-on-year earnings growth of 15.10% give Mears Group an acceptable PEG ratio of 1.06x.

Simply Wall St -

May Undervalued Dividend Paying Stocks

Over the past 10 years, Mears Group has been distributing dividends back to its shareholders, with a recent yield of 3.67%. … LSE:MER Historical Dividend Yield May 21st 18 Pets at Home Group Plc (LSE:PETS) Pets at Home Group Plc, through its subsidiaries, operates as a specialist retailer of pet food, pet related products, and pet accessories in the United Kingdom. … LSE:PETS Historical Dividend Yield May 21st 18 TBC Bank Group PLC (LSE:TBCG) TBC Bank Group PLC, through its subsidiaries, provides banking, leasing, brokerage, and card processing services to corporate and individual customers in Georgia.

Simply Wall St -

Is It Time To Buy Mears Group plc (LON:MER)?

Let’s take a look at Mears Group’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. … Another thing to keep in mind is that Mears Group’s share price is quite stable relative to the rest of the market, as indicated by its low beta. … Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations.

Simply Wall St -

Does Mears Group plc's (LON:MER) Past Performance Indicate A Weaker Future?

See our latest analysis for Mears Group How Did MER's Recent Performance Stack Up Against Its Past? … For Mears Group, its most recent earnings (trailing twelve month) is UK£20.91M, which, relative to last year’s level, has dropped by -2.88%. … This means that whatever uplift the industry is enjoying, Mears Group has not been able to leverage it as much as its industry peers.What does this mean?

Simply Wall St -

Hedge Your Bet With These Dividend Payers

LSE:MER Historical Dividend Yield May 6th 18 Headlam Group plc (LSE:HEAD) Headlam Group plc, through its subsidiaries, sells, markets, supplies, and distributes floorcovering and other ancillary products. … LSE:HEAD Historical Dividend Yield May 6th 18 Hansteen Holdings PLC (LSE:HSTN) Hansteen Holdings PLC is a company which was incorporated in the United Kingdom and registered in England and Wales on 27 October 2005. … HSTN has an alluring dividend yield of 6.17% and the company currently pays out 62.39% of its profits as dividends , and analysts are expecting the payout ratio in three years to hit 89.78%.

Simply Wall St -

Top Undervalued Dividend Picks For The Day

LSE:MER Historical Dividend Yield Apr 16th 18 McCarthy & Stone plc (LSE:MCS) McCarthy & Stone plc, together with its subsidiaries, operates as a retirement housing market in the United Kingdom. … LSE:MCS Historical Dividend Yield Apr 16th 18 Pets at Home Group Plc (LSE:PETS) Pets at Home Group Plc, through its subsidiaries, operates as a specialist retailer of pet food, pet related products, and pet accessories in the United Kingdom. … LSE:PETS Historical Dividend Yield Apr 16th 18 For more mispriced dividend stocks to add to your portfolio, explore this interactive list of undervalued dividend payers.

Simply Wall St -

What Do Analysts Think About Mears Group plc's (LON:MER) Earnings Trajectory?

Below is a brief commentary on my key takeaways on how market analysts predict Mears Group's earnings growth trajectory over the next few years and whether the future looks brighter. … Check out our latest analysis for Mears Group Analysts' outlook for the upcoming year seems positive, with earnings growing by a robust 38.00%. … The pro of this approach is that it ignores near term flucuations and accounts for the overarching direction of Mears Group's earnings trajectory over time, be more volatile.

Simply Wall St -

Investors Are Undervaluing Mears Group plc (LON:MER) By 39%

I am going to run you through how I calculated the intrinsic value of Mears Group plc (LSE:MER) by taking the expected future cash flows and discounting them to their present value. … 5-year cash flow forecast 2018 2019 2020 2021 2022 Levered FCF (£, Millions) £36.83 £38.90 £41.69 £44.68 £47.88 Source Analyst x3 Analyst x3 Extrapolated @ (7.17%) Extrapolated @ (7.17%) Extrapolated @ (7.17%) Present Value Discounted @ 8.3% £34.01 £33.17 £32.82 £32.48 £32.14 Present Value of 5-year Cash Flow (PVCF)= £165 After calculating the present value of future cash flows in the intial 5-year period we need to calculate the Terminal Value, which accounts for all the future cash flows beyond the first stage. … Terminal Value (TV) = FCF2022 × (1 + g) ÷ (r – g) = £48 × (1 + 1.5%) ÷ (8.3% – 1.5%) = £714 Present Value of Terminal Value (PVTV) = TV / (1 + r)5 = £714 / ( 1 + 8.3%)5 = £479 The total value is the sum of cash flows for the next five years and the discounted terminal value, which results in the Total Equity Value, which in this case is £644.

Simply Wall St -

MER Company Info

Map
Description

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 solution 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; and installation services, such as insulation, glazing, heating, lighting, and renewable services; and monitoring and aftercare services. In addition, the company offers residential property management in partnership with landlords, investors, and local authorities; a range of new build development solutions on behalf of local authorities, ALMOs, and registered providers; and a range of home improvement services comprising advice and information, home improvements, disabled facilities grants, aids and adaptations, energy efficiency, small repairs, stairlifts, and home from hospital services, as well as minor adaptations that include ramps. Further, it provides facilities management and insourcing solutions; care services, which comprise personal care, cooking, cleaning, medication, or shopping for older and disabled people; and housing management, training, house building, insurance and professional services. The company was incorporated in 1996 and is headquartered in Gloucester, the United Kingdom.

Details
Name: Mears Group plc
MER
Exchange: LSE
Founded: 1996
£323,299,317
103,621,576
Website: http://www.mearsgroup.co.uk
Address: Mears Group plc
1390 Montpellier Court,
Gloucester Business Park,
Gloucester,
Gloucestershire, GL3 4AH,
United Kingdom
Listings
Exchange Symbol Ticker Symbol Security Exchange Country Currency Listed on
LSE MER Ordinary Shares London Stock Exchange GB GBP 04. Oct 1996
DB MM7 Ordinary Shares Deutsche Boerse AG DE EUR 04. Oct 1996
BATS-CHIXE MERL Ordinary Shares BATS 'Chi-X Europe' GB GBP 04. Oct 1996
Number of employees
Current staff
Staff numbers
11,636
Mears Group employees.
Industry
Diversified Support Services
Commercial Services
Company Analysis and Financial Data Status
Area Date (UTC time)
Company Analysis updated: 2018/06/20 01:13
End of day share price update: 2018/06/18 00:00
Last estimates confirmation: 2018/06/01
Last earnings update: 2017/12/31
Last annual earnings update: 2017/12/31


All dates and times in UTC. All financial data provided by Standard & Poor’s Capital IQ.

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.