Mitie Group (LSE:MTO) - Share price, News & Analysis

Q: What is the Fair Price of MTO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MTO (£0.59) is trading below our estimate of [[fair value]] (£1.24)

MTO fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	3/6
Past Performance	2/6
Financial Health	5/6
Dividends	3/6

MTO Stock Overview

Mitie Group plc, together with its subsidiaries, provides strategic outsourcing services in the United Kingdom and internationally.

Rewards

Trading at 52.8% below our estimate of its fair value

Earnings are forecast to grow 52.77% per year

Became profitable this year

Risk Analysis

Unstable dividend track record

Large one-off items impacting financial results

Mitie Group Competitors

Renewi

LSE:RWI

UK£592.4m

Serco Group

LSE:SRP

UK£2.1b

RPS Group

LSE:RPS

UK£279.4m

Water Intelligence

AIM:WATR

UK£112.0m

Price History & Performance

Summary of all time highs, changes and price drops for Mitie Group
Historical stock prices
Current Share Price	UK£0.59
52 Week High	UK£0.78
52 Week Low	UK£0.45
Beta	1.43
1 Month Change	3.72%
3 Month Change	2.27%
1 Year Change	-12.80%
3 Year Change	-59.59%
5 Year Change	-78.75%
Change since IPO	204.42%

Shareholder Returns

	MTO	GB Commercial Services	GB Market
7D	-6.8%	3.9%	1.8%
1Y	-12.8%	1.5%	-7.3%

Return vs Industry: MTO underperformed the UK Commercial Services industry which returned 1.5% over the past year.

Return vs Market: MTO underperformed the UK Market which returned -7.3% over the past year.

Price Volatility

Is MTO's price volatile compared to industry and market?
MTO volatility
MTO Average Weekly Movement	5.4%
Commercial Services Industry Average Movement	5.4%
Market Average Movement	5.5%
10% most volatile stocks in GB Market	10.8%
10% least volatile stocks in GB Market	2.8%

Stable Share Price: MTO is not significantly more volatile than the rest of UK stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: MTO's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1936	71,330	Phil Bentley	https://www.mitie.com

Mitie Group plc, together with its subsidiaries, provides strategic outsourcing services in the United Kingdom and internationally. The company operates in eight segments: Business Services, Technical Services, Central Government & Defense (CG&D), Communities, Care & Custody, Landscapes, Waste, and Spain. The company provides security services, such as manned guarding and technology-backed monitoring solutions, fire and security systems installations, vetting and front-of-house services; and general, specialist, and technical cleaning services in offices, buildings, transport and logistics hubs, and high-security environments.

Mitie Group Fundamentals Summary

How do Mitie Group's earnings and revenue compare to its market cap?
MTO fundamental statistics
Market Cap	UK£824.89m
Earnings (TTM)	UK£31.30m
Revenue (TTM)	UK£3.90b

26.0x

P/E Ratio

0.2x

P/S Ratio

Is MTO overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MTO income statement (TTM)
Revenue	UK£3.90b
Cost of Revenue	UK£3.45b
Gross Profit	UK£451.80m
Other Expenses	UK£420.50m
Earnings	UK£31.30m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.022
Gross Margin	11.57%
Net Profit Margin	0.80%
Debt/Equity Ratio	41.8%

How did MTO perform over the long term?

See historical performance and comparison

Dividends

3.1%

Current Dividend Yield

80%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is MTO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MTO?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MTO. This is calculated by dividing MTO's market cap by their current preferred multiple.
What is MTO's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	UK£824.89m

MTO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.2x
Enterprise Value/EBITDA	6.2x
PEG Ratio	0.5x

Price to Earnings Ratio vs Peers

How does MTO's PE Ratio compare to its peers?

MTO PE Ratio vs Peers

The above table shows the PE ratio for MTO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	21.8x
RWI Renewi	9.2x	12.9%	UK£592.4m
SRP Serco Group	6.8x	-17.1%	UK£2.1b
RPS RPS Group	47.4x	32.0%	UK£279.4m
WATR Water Intelligence	23.9x	n/a	UK£112.0m
MTO Mitie Group	26.4x	52.8%	UK£824.9m

Forward PE

Price-To-Earnings vs Peers: MTO is expensive based on its Price-To-Earnings Ratio (26x) compared to the peer average (21.8x).

Price to Earnings Ratio vs Industry

How does MTO's PE Ratio compare vs other companies in the GB Commercial Services Industry?

Price-To-Earnings vs Industry: MTO is good value based on its Price-To-Earnings Ratio (26x) compared to the UK Commercial Services industry average (29.3x)

Price to Earnings Ratio vs Fair Ratio

What is MTO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MTO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	26x
Fair PE Ratio	68.7x

Price-To-Earnings vs Fair Ratio: MTO is good value based on its Price-To-Earnings Ratio (26x) compared to the estimated Fair Price-To-Earnings Ratio (68.7x).

Share Price vs Fair Value

What is the Fair Price of MTO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MTO (£0.59) is trading below our estimate of fair value (£1.24)

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

Price to Earnings Growth Ratio

PEG Ratio: MTO is good value based on its PEG Ratio (0.5x)

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Future Growth

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

Future Growth Score

3/6

Future Growth Score 3/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

52.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MTO's forecast earnings growth (52.8% per year) is above the savings rate (0.9%).

Earnings vs Market: MTO's earnings (52.8% per year) are forecast to grow faster than the UK market (11% per year).

High Growth Earnings: MTO's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: MTO's revenue (2.4% per year) is forecast to grow slower than the UK market (4.1% per year).

High Growth Revenue: MTO'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: Insufficient data to determine if MTO's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Mitie Group performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

57.0%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MTO has a large one-off loss of £27.3M impacting its March 31 2022 financial results.

Growing Profit Margin: MTO became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: MTO has become profitable over the past 5 years, growing earnings by 57% per year.

Accelerating Growth: MTO has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: MTO has become profitable in the last year, making it difficult to compare its past year earnings growth to the Commercial Services industry (106.9%).

Return on Equity

High ROE: MTO's Return on Equity (7.4%) is considered low.

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Financial Health

How is Mitie Group's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MTO's short term assets (£1.1B) do not cover its short term liabilities (£1.2B).

Long Term Liabilities: MTO's short term assets (£1.1B) exceed its long term liabilities (£241.0M).

Debt to Equity History and Analysis

Debt Level: MTO has more cash than its total debt.

Reducing Debt: MTO's debt to equity ratio has reduced from 343.8% to 41.8% over the past 5 years.

Debt Coverage: MTO's debt is well covered by operating cash flow (129.3%).

Interest Coverage: MTO's interest payments on its debt are well covered by EBIT (6.6x coverage).

Balance Sheet

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Dividend

What is Mitie Group current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

3.07%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MTO's dividend (3.07%) is higher than the bottom 25% of dividend payers in the UK market (1.87%).

High Dividend: MTO's dividend (3.07%) is low compared to the top 25% of dividend payers in the UK market (5.16%).

Stability and Growth of Payments

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

Growing Dividend: MTO's dividend payments have fallen over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (80.2%), MTO's payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (12.9%), MTO's dividend payments are thoroughly covered by cash flows.

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Management

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

5.3yrs

Average management tenure

CEO

Phil Bentley (62 yo)

5.5yrs

Tenure

UK£2,741,397

Compensation

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 &...

CEO Compensation Analysis

Compensation vs Market: Phil's total compensation ($USD3.34M) is above average for companies of similar size in the UK market ($USD1.35M).

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

Leadership Team

Experienced Management: MTO's management team is seasoned and experienced (5.3 years average tenure).

Board Members

Experienced Board: MTO's board of directors are considered experienced (4.6 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 not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/28 00:00
End of Day Share Price	2022/06/28 00:00
Earnings	2022/03/31
Annual Earnings	2022/03/31