LSE:MCS

Stock Analysis Report

Executive Summary

McCarthy & Stone plc, together with its subsidiaries, operates as a retirement housing market in the United Kingdom.

Rewards

Trading at 30.8% below its fair value

Earnings are forecast to grow 17.7% per year

Risk Analysis

Unstable dividend track record

Profit margins (5.8%) are lower than last year (9.7%)



Snowflake Analysis

Flawless balance sheet and fair value.


Similar Companies

Share Price & News

How has McCarthy & Stone's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

3.5%

MCS

5.3%

GB Consumer Durables

1.4%

GB Market


1 Year Return

6.0%

MCS

29.6%

GB Consumer Durables

12.4%

GB Market

Return vs Industry: MCS underperformed the UK Consumer Durables industry which returned 34.2% over the past year.

Return vs Market: MCS underperformed the UK Market which returned 12.7% over the past year.


Shareholder returns

MCSIndustryMarket
7 Day3.5%5.3%1.4%
30 Day1.4%7.1%1.8%
90 Day-5.7%17.8%8.8%
1 Year7.5%6.0%38.8%29.6%18.3%12.4%
3 Year-2.8%-10.9%79.7%50.0%23.8%8.0%
5 Yearn/a150.8%88.5%41.8%8.9%

Price Volatility Vs. Market

How volatile is McCarthy & Stone's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is McCarthy & Stone undervalued compared to its fair value and its price relative to the market?

31.0%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MCS (£1.42) is trading below our estimate of fair value (£2.06)

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


Price To Earnings Ratio

PE vs Industry: MCS is poor value based on its PE Ratio (18.6x) compared to the Consumer Durables industry average (12.1x).

PE vs Market: MCS is poor value based on its PE Ratio (18.6x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: MCS is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: MCS is good value based on its PB Ratio (1x) compared to the GB Consumer Durables industry average (1.7x).


Next Steps

Future Growth

How is McCarthy & Stone forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

17.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MCS's forecast earnings growth (17.7% per year) is above the savings rate (0.5%).

Earnings vs Market: MCS's earnings (17.7% per year) are forecast to grow faster than the UK market (11.7% per year).

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

Revenue vs Market: MCS's revenue is expected to decline over the next 3 years (-3.3% per year).

High Growth Revenue: MCS's revenue is forecast to decline over the next 3 years (-3.3% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MCS's Return on Equity is forecast to be low in 3 years time (8.2%).


Next Steps

Past Performance

How has McCarthy & Stone performed over the past 5 years?

-1.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MCS has high quality earnings.

Growing Profit Margin: MCS's current net profit margins (5.8%) are lower than last year (9.7%).


Past Earnings Growth Analysis

Earnings Trend: MCS's earnings have declined by -1.2% per year over the past 5 years.

Accelerating Growth: MCS's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: MCS had negative earnings growth (-36.4%) over the past year, making it difficult to compare to the Consumer Durables industry average (4.4%).


Return on Equity

High ROE: MCS's Return on Equity (5.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is McCarthy & Stone's financial position?


Financial Position Analysis

Short Term Liabilities: MCS's short term assets (£868.6M) exceed its short term liabilities (£135.1M).

Long Term Liabilities: MCS's short term assets (£868.6M) exceed its long term liabilities (£80.1M).


Debt to Equity History and Analysis

Debt Level: MCS's debt to equity ratio (11.7%) is considered satisfactory.

Reducing Debt: MCS's debt to equity ratio has reduced from 35% to 11.7% over the past 5 years.

Debt Coverage: MCS's debt is well covered by operating cash flow (68%).

Interest Coverage: MCS's interest payments on its debt are well covered by EBIT (19.3x coverage).


Balance Sheet

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

Debt Coverage by Assets: MCS's debt is covered by short term assets (assets are 9.9x debt).


Next Steps

Dividend

What is McCarthy & Stone's current dividend yield, its reliability and sustainability?

3.67%

Current Dividend Yield


Dividend Yield vs Market

company3.7%marketbottom25%1.8%markettop25%5.0%industryaverage5.2%forecastin3Years4.1%

Current dividend yield vs market & industry

Notable Dividend: MCS's dividend (3.8%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: MCS's dividend (3.8%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

Stable Dividend: MCS has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: MCS's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (70.8%), MCS's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MCS's dividends in 3 years are forecast to be covered by earnings (57.2% payout ratio).


Next Steps

Management

What is the CEO of McCarthy & Stone's salary, the management and board of directors tenure and is there insider trading?

1.3yrs

Average management tenure


CEO

John Tonkiss (51yo)

1.3yrs

Tenure

UK£509,897

Compensation

Mr. John M. Tonkiss had served as Interim Chief Executive Officer of McCarthy & Stone Plc from September 1, 2018 to September 25, 2018. He has been the Chief Executive Officer at McCarthy & Stone Plc since ...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD663.02K) is below average for companies of similar size in the UK market ($USD1.13M).

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


Management Age and Tenure

1.3yrs

Average Tenure

51yo

Average Age

Experienced Management: MCS's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.


Board Age and Tenure

1.8yrs

Average Tenure

56yo

Average Age

Experienced Board: MCS's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

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


Management Team

  • John Tonkiss (51yo)

    CEO & Executive Director

    • Tenure: 1.3yrs
    • Compensation: UK£509.90k
  • Nigel Turner (53yo)

    COO of Build & Director

    • Tenure: 1yrs
  • Mike Lloyd (41yo)

    COO of Services & Customers and Director

    • Tenure: 1yrs
  • Paula Jordan

    Human Resources Director

    • Rowan Baker

      CFO, Interim Company Secretary & Executive Director

      • Compensation: UK£449.10k
    • Brendon O’Neill

      Divisional Managing Director - South

      • Tenure: 2yrs
    • Marina Calero

      Director of Investor Relations

      • Scott Brooker

        Deputy Group Company Secretary


        Board Members

        • John Tonkiss (51yo)

          CEO & Executive Director

          • Tenure: 1.3yrs
          • Compensation: UK£509.90k
        • Frank Nelson (68yo)

          Senior Independent Non-Executive Director

          • Compensation: UK£74.48k
        • John Carter (58yo)

          Independent Non-Executive Director

          • Tenure: 2.3yrs
          • Compensation: UK£50.05k
        • Paul Lester (69yo)

          Group Non-Executive Chairman

          • Tenure: 2yrs
          • Compensation: UK£141.95k
        • Gill Barr (61yo)

          Independent Non-Executive Director

          • Tenure: 0.8yrs
        • Geeta Nanda (54yo)

          Independent Non-Executive Director

          • Tenure: 4.8yrs
          • Compensation: UK£54.33k
        • Nigel Turner (53yo)

          COO of Build & Director

          • Tenure: 1yrs
        • Mike Lloyd (41yo)

          COO of Services & Customers and Director

          • Tenure: 1yrs
        • Rowan Baker

          CFO, Interim Company Secretary & Executive Director

          • Compensation: UK£449.10k
        • Arun Nagwaney

          Non-Executive Director

          • Tenure: 1.7yrs

        Company Information

        McCarthy & Stone plc's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: McCarthy & Stone plc
        • Ticker: MCS
        • Exchange: LSE
        • Founded: 1977
        • Industry: Homebuilding
        • Sector: Consumer Durables
        • Market Cap: UK£789.922m
        • Shares outstanding: 537.36m
        • Website: https://www.mccarthyandstonegroup.co.uk

        Number of Employees


        Location

        • McCarthy & Stone plc
        • 100 Holdenhurst Road
        • 4th Floor
        • Bournemouth
        • Dorset
        • BH8 8AQ
        • United Kingdom

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        MCSLSE (London Stock Exchange)YesOrdinary SharesGBGBPNov 2015
        MCMDB (Deutsche Boerse AG)YesOrdinary SharesDEEURNov 2015
        MCSLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPNov 2015

        Biography

        McCarthy & Stone plc, together with its subsidiaries, operates as a retirement housing market in the United Kingdom. The company builds, sells, and manages retirement developments. It offers retirement living developments, which provide apartments for customers aged 60 and over; retirement living plus developments, which are designed for customers aged 70 and over, as well as offers retirement properties with management services, domestic assistance, personal care, and additional support; and lifestyle living developments for customers aged 55 and over. The company was founded in 1977 and is headquartered in Bournemouth, the United Kingdom. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/20 22:36
        End of Day Share Price2020/01/20 00:00
        Earnings2019/02/28
        Annual Earnings2018/08/31


        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.