LSE:MRW

Stock Analysis Report

Executive Summary

Wm Morrison Supermarkets PLC operates retail super stores under the Morrisons brand name in the United Kingdom.

Rewards

Trading at 41.2% below its fair value

Earnings are forecast to grow 5.66% per year

Earnings grew by 29.9% over the past year

Risk Analysis

Dividend of 6.43% is not well covered by earnings



Snowflake Analysis

Undervalued with proven track record and pays a dividend.


Similar Companies

Share Price & News

How has Wm Morrison Supermarkets's share price performed over time and what events caused price changes?


Latest Share Price and Events

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


Market Performance


7 Day Return

0.8%

MRW

4.0%

GB Consumer Retailing

0.1%

GB Market


1 Year Return

-12.9%

MRW

11.4%

GB Consumer Retailing

9.8%

GB Market

Return vs Industry: MRW underperformed the UK Consumer Retailing industry which returned 11.4% over the past year.

Return vs Market: MRW underperformed the UK Market which returned 9.8% over the past year.


Shareholder returns

MRWIndustryMarket
7 Day0.8%4.0%0.1%
30 Day-0.9%1.6%-0.2%
90 Day1.6%2.7%2.0%
1 Year-7.3%-12.9%15.9%11.4%15.5%9.8%
3 Year-0.5%-12.9%7.0%-0.5%20.1%4.8%
5 Year44.7%16.0%45.9%32.0%44.5%11.5%

Price Volatility Vs. Market

How volatile is Wm Morrison Supermarkets's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Wm Morrison Supermarkets undervalued compared to its fair value and its price relative to the market?

41.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: MRW (£1.97) is trading below our estimate of fair value (£3.35)

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


Price To Earnings Ratio

PE vs Industry: MRW is good value based on its PE Ratio (15x) compared to the Consumer Retailing industry average (21.6x).

PE vs Market: MRW is good value based on its PE Ratio (15x) compared to the UK market (17.2x).


Price to Earnings Growth Ratio

PEG Ratio: MRW is poor value based on its PEG Ratio (2.7x)


Price to Book Ratio

PB vs Industry: MRW is good value based on its PB Ratio (1.1x) compared to the GB Consumer Retailing industry average (1.4x).


Next Steps

Future Growth

How is Wm Morrison Supermarkets forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

5.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: MRW's forecast earnings growth (5.7% per year) is above the savings rate (0.5%).

Earnings vs Market: MRW's earnings (5.7% per year) are forecast to grow slower than the UK market (12.4% per year).

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

Revenue vs Market: MRW's revenue (1.9% per year) is forecast to grow slower than the UK market (3.6% per year).

High Growth Revenue: MRW's revenue (1.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: MRW's Return on Equity is forecast to be low in 3 years time (7.9%).


Next Steps

Past Performance

How has Wm Morrison Supermarkets performed over the past 5 years?

55.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: MRW has high quality earnings.

Growing Profit Margin: MRW's current net profit margins (1.8%) are higher than last year (1.4%).


Past Earnings Growth Analysis

Earnings Trend: MRW has become profitable over the past 5 years, growing earnings by 55.5% per year.

Accelerating Growth: MRW's earnings growth over the past year (29.9%) is below its 5-year average (55.5% per year).

Earnings vs Industry: MRW earnings growth over the past year (29.9%) exceeded the Consumer Retailing industry -4.2%.


Return on Equity

High ROE: MRW's Return on Equity (7.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Wm Morrison Supermarkets's financial position?


Financial Position Analysis

Short Term Liabilities: MRW's short term assets (£1.2B) do not cover its short term liabilities (£3.5B).

Long Term Liabilities: MRW's short term assets (£1.2B) do not cover its long term liabilities (£2.7B).


Debt to Equity History and Analysis

Debt Level: MRW's debt to equity ratio (28.7%) is considered satisfactory.

Reducing Debt: MRW's debt to equity ratio has reduced from 52.6% to 28.7% over the past 5 years.

Debt Coverage: MRW's debt is well covered by operating cash flow (58.8%).

Interest Coverage: MRW's interest payments on its debt are well covered by EBIT (11.5x coverage).


Balance Sheet

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

Debt Coverage by Assets: MRW's debt is not covered by short term assets (assets are 1x debt).


Next Steps

Dividend

What is Wm Morrison Supermarkets's current dividend yield, its reliability and sustainability?

6.43%

Current Dividend Yield


Dividend Yield vs Market

company6.4%marketbottom25%2.0%markettop25%5.2%industryaverage3.5%forecastin3Years5.5%

Current dividend yield vs market & industry

Notable Dividend: MRW's dividend (6.43%) is higher than the bottom 25% of dividend payers in the UK market (1.95%).

High Dividend: MRW's dividend (6.43%) is in the top 25% of dividend payers in the UK market (5.19%)


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (50.9%), MRW's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: MRW's dividends in 3 years are not forecast to be well covered by earnings (92.5% payout ratio).


Next Steps

Management

What is the CEO of Wm Morrison Supermarkets's salary, the management and board of directors tenure and is there insider trading?

4.3yrs

Average management tenure


CEO

David Potts (62yo)

4.8yrs

Tenure

UK£4,609,000

Compensation

Mr. David T. Potts has been the Chief Executive and Executive Director of Wm. Morrison Supermarkets plc since joining in March 16, 2015. Mr. Potts served as the Chief Executive of the Asian Business at Te ...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD6.07M) is above average for companies of similar size in the UK market ($USD3.43M).

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


Management Age and Tenure

4.3yrs

Average Tenure

Experienced Management: MRW's management team is considered experienced (4.3 years average tenure).


Board Age and Tenure

4.2yrs

Average Tenure

60.5yo

Average Age

Experienced Board: MRW's board of directors are considered experienced (4.2 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUK£425,62214 May 19
Trevor Strain
EntityIndividual
Role
Member of the Board of Directors
COO, Group Chief Finance & Commercial Officer and Executive Director
Shares200,000
Max PriceUK£2.13

Ownership Breakdown

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


Management Team

  • David Potts (62yo)

    Chief Executive & Executive Director

    • Tenure: 4.8yrs
    • Compensation: UK£4.61m
  • Jonathan Burke

    Company Secretary

    • Tenure: 2.8yrs
  • Andrew Kasoulis

    Investor Relations Director

    • Tenure: 0yrs
  • Trevor Strain

    COO, Group Chief Finance & Commercial Officer and Executive Director

    • Tenure: 6.7yrs
    • Compensation: UK£3.24m
  • Andy Atkinson

    Group Customer & Marketing Director

    • Tenure: 3.9yrs
  • Clare Grainger

    Group People Director

    • Tenure: 4.3yrs

Board Members

  • Andy Higginson (62yo)

    Independent Chairman

    • Tenure: 4.9yrs
    • Compensation: UK£438.00k
  • David Potts (62yo)

    Chief Executive & Executive Director

    • Tenure: 4.8yrs
    • Compensation: UK£4.61m
  • Rooney Anand (55yo)

    Senior Independent Non Executive Director

    • Tenure: 3.9yrs
    • Compensation: UK£103.00k
  • Paula Vennells (60yo)

    Non-Executive Director

    • Tenure: 3.9yrs
    • Compensation: UK£89.00k
  • Tony van Kralingen (60yo)

    Non-Executive Director

    • Tenure: 2.3yrs
    • Compensation: UK£102.00k
  • Kevin Havelock (61yo)

    Non-Executive Director

    • Tenure: 1.8yrs
    • Compensation: UK£89.00k
  • Belinda Richards (60yo)

    Non-Executive Director

    • Tenure: 4.3yrs
    • Compensation: UK£102.00k
  • Trevor Strain

    COO, Group Chief Finance & Commercial Officer and Executive Director

    • Tenure: 6.7yrs
    • Compensation: UK£3.24m
  • Richard Colin Davidson (68yo)

    Non Executive Director

    • Tenure: 4.2yrs
    • Compensation: UK£102.00k

Company Information

Wm Morrison Supermarkets PLC's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Wm Morrison Supermarkets PLC
  • Ticker: MRW
  • Exchange: LSE
  • Founded: 1899
  • Industry: Food Retail
  • Sector: Consumer Retailing
  • Market Cap: UK£4.719b
  • Shares outstanding: 2.39b
  • Website: https://www.morrisons.co.uk

Number of Employees


Location

  • Wm Morrison Supermarkets PLC
  • Hilmore House
  • Gain Lane
  • Bradford
  • West Yorkshire
  • BD3 7DL
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
MRWS.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
MRWLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
MZPDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
MRWLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
MRW NBMV (Bolsa Mexicana de Valores)YesOrdinary SharesMXMXNJan 1992
MRWSWX (SIX Swiss Exchange)YesOrdinary SharesCHCHFJan 1992
MRWS.YOTCPK (Pink Sheets LLC)UNSPONSORED ADRUSUSDOct 2008

Biography

Wm Morrison Supermarkets PLC operates retail super stores under the Morrisons brand name in the United Kingdom. The company engages in the in-store and online grocery retailing activities. It also supplies ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/10 20:43
End of Day Share Price2019/12/10 00:00
Earnings2019/08/04
Annual Earnings2019/02/03


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.