Mears Group PLC, through its subsidiaries, provides a range of outsourced services to the public and private sectors in the United Kingdom. More info.
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value. We use
analyst's estimates of cash flows going forward 5 years.
See our documentation to learn about this calculation.
|Levered FCF (GBP, Millions)||£31.09||£36.30||£38.27||£40.02||£41.86|
|Source||Analyst x2||Analyst x4||Analyst x2||Extrapolated @ (4.59%)||Extrapolated @ (4.59%)|
Discounted (@ 8.3%)
Present value of next 5 years cash flows:
Terminal Value = FCF2022 × (1 + g) ÷ (Discount Rate – g)
Terminal Value = £42 × (1 + 1.49%) ÷ (8.3% – 1.49%)
Terminal value based on the Perpetuity Method where growth (g) =
Present value of terminal value:
Equity Value (Total value) = Present value of next 5 years cash flows +
£566 = £147 + £419
Value = Total value / Shares Outstanding (£566 / 104)Discount to Share Price
Value per share:
Current discount (share price of £3.57): 34.66%
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.
Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)
Discount rate = 8.3% = 1.49% + (0.8 * 8.51%)
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm). Note the market value of equity is used not the book value (£367,671,032).
Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))
0.56 = 0.49 (1 + (1- 19%) (17.63%))
Levered Beta used in calculation = 0.8
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.
Average tenure and age of the Mears Group board of directors in years:
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 - – Full article
To get some insight, this article will interpret Mears Group's margin performance to assist in analysing the revenue and cost anatomy behind the earnings expectations for the future and the impact it has on shareholder returns relative to the wider industry. … Margin Calculation for MER Profit Margin = Net Income ÷ Revenue ∴ Profit Margin = 21.43 Million ÷ 944.73 Million = 2.27% There has been a contraction in Mears Group's margin over the past five years, as a result of average revenue growth of 9.17% exceeding 5.32% in average net income growth, which means that although revenue has increased, a smaller portion falls in to the bottom line. … Using Mears Group's margin expectations as a way to understand projections for the future Based on future expectations, MER's profit margin will reverse its previous trend and start to expand, with 4.05% in expected annual revenue growth and a forecasted 34.91% in annual net income growth.Simply Wall St - – Full article
MER's debt level has been constant at around UK£66.48M over the previous year made up of current and long term debt. … Moreover, MER has generated UK£25.71M in operating cash flow over the same time period, resulting in an operating cash to total debt ratio of 38.68%, meaning that MER’s current level of operating cash is high enough to cover debt. … For MER, the ratio of 12.16x suggests that interest is comfortably covered, which means that debtors may be willing to loan the company more money, giving MER ample headroom to grow its debt facilities.Next Steps: Although MER’s debt level is towards the higher end of the spectrum, its cash flow coverage seems adequate to meet obligations which means its debt is being efficiently utilised.Simply Wall St - – Full article
Great news for investors – Mears Group is still trading at a fairly cheap price. … What’s more interesting is that, Mears Group’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move to its intrinsic value, and secondly, there may be less chances to buy low in the future once it reaches that value. … Its buoyant future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy Mears Group.Simply Wall St - – Full article
For the purpose of this commentary, I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. … This means on average, Mears Group has been able to consistently improve its profits over the last couple of years as well. … Though Mears Group's past data is helpful, it is only one aspect of my investment thesis.Simply Wall St - – Full article
LSE:MER Historical Dividend Yield Dec 14th 17 International Personal Finance Plc (LSE:IPF) International Personal Finance plc provides home credit and digital loans under the Provident brand in Poland, Lithuania, the Czech Republic, Slovakia, Southern Europe, and Mexico. … LSE:IPF Historical Dividend Yield Dec 14th 17 SThree plc (LSE:STHR) SThree plc provides recruitment services for science, technology, engineering, and mathematics industries primarily in the United Kingdom and Ireland, Continental Europe, the United States, and the Asia Pacific and the Middle East. … LSE:STHR Historical Dividend Yield Dec 14th 17 For more solid dividend payers to add to your portfolio, you can use our free platform to explore our interactive list of top dividend payers.Simply Wall St - – Full article
MER is trading at price-to-earnings (PE) ratio of 20.1x, which suggests that Mears Group is overvalued based on current earnings compared to the commercial services and supplies industry average of 19.13x , and overvalued compared to the GB market average ratio of 17.99x. … However, seeing as Mears Group is perceived as a high-growth stock, we must also account for its earnings growth, which is captured in the PEG ratio. … PE ratio of 20.1x and predicted 24.37% growth in earnings next year give Mears Group a low PEG ratio of 0.84x.Simply Wall St - – Full article
Return on Equity = Net Profit ÷ Shareholders Equity ROE is measured against cost of equity in order to determine the efficiency of MER’s equity capital deployed. … While MER’s peers may have higher ROE, it may also incur higher cost of equity. … This is called the Dupont Formula: Dupont Formula ROE = profit margin × asset turnover × financial leverage ROE = (annual net profit ÷ sales) × (sales ÷ assets) × (assets ÷ shareholders’ equity) ROE = annual net profit ÷ shareholders’ equity LSE:MER Last Perf Nov 15th 17 The first component is profit margin, which measures how much of sales is retained after the company pays for all its expenses.Simply Wall St - – Full article
I am going to run you through how I calculated the intrinsic value of Mears Group plc (LSE:MER) by estimating the company's future cash flows and discounting them to their present value. … 5-year cash flow forecast 2017 2018 2019 2020 2021 Levered FCF (GBP, Millions) £35.45 £40.25 £44.65 £47.85 £51.28 Source Analyst x2 Analyst x2 Analyst x2 Extrapolated @ (7.17%) Extrapolated @ (7.17%) Present Value Discounted @ 8.3% £32.73 £34.32 £35.15 £34.79 £34.42 Present Value of 5-year Cash Flow (PVCF)= £171 The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. … LSE:MER Intrinsic Value Oct 31st 17 The assumptions I'd like to point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows.Simply Wall St - – Full article
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.
|Name:||Mears Group plc|
Mears Group plc
1390 Montpellier Court,
Gloucester Business Park,
Gloucestershire, GL3 4AH,
|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|
|Diversified Support Services|
|Company Analysis updated:||2018/03/21 18:52|
|Last estimates confirmation:||2018/03/20|
|Last earnings update:||2017/12/31|
|Last annual earnings update:||2017/12/31|
All dates 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.